Crypto Ban In India Issued Without Independent Research

News, Regulation | June 14, 2018 By:

The Reserve Bank of India (RBI) has admitted that its decision to block financial institutions from dealing with cryptocurrency businesses was not supported by any public consultation or independent research.

In April of this year, the RBI ordered banks to refrain from providing any services to individuals or business entities dealing with or settling cryptocurrencies. The move was formally motivated by the need to protect consumers and prevent money laundering.

During the same month, Shri Varun Sethi, who presents himself as a blockchain lawyer, filed a right to information (RTI) seeking responses from the central bank regarding its crypto ban. Sethi has asked the RBI if there was a committee established to determine the risks of trading in cryptocurrency, and what standards were put in place to assess these risks.

In a response to the RTI, the central bank said no officer or expert had been responsible to craft its decision, and no formal committee had been established to investigate the risks associated with cryptocurrencies. The central bank also admitted that it has done no research before reaching a conclusion on its stance.

Last month, The Supreme Court of India barred all high courts from accepting petitions relating to the ban. The SC decided to hear all matters and has scheduled the next hearing on July 20.

Rashmi Deshpande, the law firm that represents one of the petitioners in the Supreme Court, said that this RBI response has cemented their case ahead of the Supreme Court hearing.

“The grounds on which our writ petition has been filed is that the RBI has not done enough research to ban a business completely,” Deshpande said.