In a recent declaration from the Reserve Bank of India (RBI), it remarked that the citizens of India don’t need cryptocurrencies as the nation’s mainstream financial system had already been working on solutions for cross-border remittances. However, RBI pointed out the legal status of cryptocurrencies in the nation and confirmed that there is no ban on cryptocurrencies.
In RBI’s response to IAMAI’s petition, the bank clarified that the cryptocurrencies are not banned in India; rather, it made it clear that commercial banks and other several regulated financial establishments are prohibited from offering their services to the cryptocurrency business.
The RBI vs crypto hearing has witnessed innumerable happenings in the last few days. You can get a detailed look at what took place inside the court room yesterday.
The RBI also stated that,
The RBI has been able to ring-fence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.
It was a response from the Central bank to a petition filed by the Internet and Mobile Association of India (IAMAI), which requested the Central bank to re-evaluate 2018’s circular to refrain from dealing with cryptocurrencies.
The IAMAI members comprise of cryptocurrency exchanges, which had earlier approached the Supreme Court of India against the RBI action. Earlier this month, in a hearing, the association put forward that banning the trading of cryptocurrencies with the absence of law was a legal business activity; yet, RBI had efficiently banned it by obstructing the access to banking channels.
Further, the RBI had highlighted a few risks, which included money laundering and terror financing by using cryptocurrencies. The supporters of crypto had argued that cryptocurrencies open up the financial sector, which creates a more comprehensive ecosystem. Few of them suggest that payments using cryptocurrencies are much faster and cheaper than mainstream counterparts.
As far as RBI is concerned, cryptocurrencies raise money laundering threats and may finance terrorist attacks explaining,
Any possible avenues which facilitate anonymous cross-border fund transfer have to be acted upon swiftly and stringently dealt with. It is an admitted fact that VCs have been used to purchase illegal and illicit goods ranging from guns and ammunition to drugs.
The Response from RBI also disclosed that, during the discussions earlier in 2018 with the government on whether to regulate or ban cryptocurrencies, the RBI stated that ICOs are prohibited and asset funds in virtual currency are not allowed to operate or set up within the Indian Jurisdiction.
As per legal experts, the viewpoint on crypto trade might pose a risk to sovereignty could be a weak point if not attested with few examples of using virtual currencies to fund terror attacks in the past.
After looking at the developments throughout the day, CryptonewsZ reported that RBI had not done good research before announcing its anti-crypto directive.
