RBI Ban takes a U turn?

RBI ban on cryptocurrencies has been a battle between RBI itself and the crypto-people in India, for months the Indian crypto-space has been dull, investors, businesses, every stakeholder and enthusiasts in the country saw a dark blanket on top of their interest, the RBI ban on the cryptocurrency has caused mayhem, but most importantly RBI’s decision was never explained, why it issued the notice where banks have to withdraw their services to anything they were serving related to cryptocurrencies.

A domestic lawyer named Varun Sethi filed an RTI (Right To Information) request over the RBI on the April Ban that explicitly forbade all the financial institutions from providing any services to any cryptocurrency business.

The surprising fact was RBI virtually responded nothing to the RTI request filed, RBI confirmed it gave little to no thought before reaching the decision in its response, nor did it conduct any research – internally or independently – before enforcing the ban.

Here are some of the queries asked to the central bank:

  • Did the authority established an internal committee to determine if there were risks in trading cryptocurrencies
  • Had the RBI conducted its own research on the subject matter, or even communicated with other counterparts where there has regulatory norms set like Japan, South Korea for a better   understanding and exploring a regulatory framework prior to the ban?

The answer to any of these queries was a plain ‘NO’ by the central bank, the RBI refused to answer to any query for the RTI filed, on top of that RBI pointed to a loophole in the RTI act, exempting them from giving an answer.

RBI also deflected from taking responsibility for outlining the policy and framework for the crypto-currency industry in India stating, the RBI cannot unilaterally decide for the government on the legality of bitcoins” in India.

An artice from CCN quoted that “An Indian government panel reportedly tasked to look into cryptocurrency policy isn’t in favor of a sweeping ban akin to the recent banking blockade enforced by the country’s central bank.” further adding “the Indian government has previously established an interdisciplinary committee in 2017 to examine and recommend a framework for the domestic cryptocurrency sector. Led by the Ministry of Finance, the committee comprises of a number of government ministries and other authorities including the central bank.

SOURCES | Govt panel not in favour of banning cryptocurrency. Govt panel may suggest allowing cryptocurrency with riders: Cogencis pic.twitter.com/osP6ziwGbO

— ET NOW (@ETNOWlive) June 13, 2018

“The Indian government has established an interdisciplinary committee that includes among others, the central bank, to examine the framework surrounding virtual currencies like bitcoin.”

“India’s Ministry of Finance has announced the formation of a committee that will examine the existing framework – of which there is notably none in India – of virtual currencies.”

The Inter-Disciplinary Committe which was claimed to be chaired by the Special Sceretary of Economic Affairs is established by the Ministry of Finance, the authority that oversees taxation & the country’s finances; and the Department of Economic Affairs, the nodal sub-department of the Ministry that prepares the country’s budget. Notably, the committee will also be represented by the central bank and the State Bank of India, the country’s largest bank that is also state-owned.

The Committee’s tasks are laid out as follows:

  • Taking stock of the present status of Virtual Currencies both in India and globally;
  • Examining the existing global regulatory and legal structures governing Virtual Currencies
  • Suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering, etc; and
  • Examine any other matter related to Virtual Currencies which may be relevant.

Where was the committe that is being monitored by the top beauracrats and ministers of the country when RBI issued the notice where banks have to withdraw their services to anything they were serving related to cryptocurrencies?

Did the committe take responsibilty for any of the tasks that were laid out?

While RBI has not broken its silence, we expect the central authorities to actually look into the matter and understand the technology, rather than spreading FUD(Fear Uncertainity and Doubt) to the public and taking such vague decisions without understanding, and overlooking at what is there on their plate.

Image Source for the featured image: hindustantimes.com

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