The quest of cryptocurrencies for a favorable legal system in India seems to enter a new chapter in which the country’s Supreme Court has intervened to dispel doubts and clarify once and for all the Government’s official position on the matter.
On Thursday (October 25th, 2018), the Supreme Court of India issued an official communication to the country’s executive asking for a clarification on its position regarding cryptocurrencies. The government must submit a formal response to the letter in no more than two weeks.
The request stems from a circular issued by the Reserve Bank of India on April 6th, 2018; in which the RBI “prohibited” any kind of trade in cryptocurrencies even though no law in the country had explicitly deemed them illegal.
The circular titled “Prohibition on dealing in Virtual Currencies (VCs)” stated that within three months, any activity related to cryptocurrencies had to end:
2. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs. 3. Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular.”
After being aware of the RBI order, several exchanges operating in the country filed petitions before various courts, opposing compliance with the said order for contravening the country’s legal provisions. Subsequently, on July 3, 2018, the Supreme Court assumed jurisdiction to decide on the generality of the cases and ruled to deny the stay of execution of RBI’s notification.
The request for an official position makes it possible to have a clear course of action to be taken, avoiding uncertainties resulting from subjectivities and interpretations.
The Indian government has not yet issued an official pronouncement; however, several exchanges have issued optimistic but cautious positions. Members of the Twitter community positioned the Hashtag #iSupportCrypto in solidarity with the exchanges.