Indian Central Bank Responds About Crypto Restrictions

Indian Central Bank Responds About Crypto Restrictions

India’s central bank has responded to a representation about its crypto banking ban. The Supreme Court gave the central bank seven days to reply following a hearing last week of the petition by the Internet & Mobile Association of India against the ban.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

RBI’s Response

Indian Central Bank Responds About Crypto RestrictionsIndia’s central bank, the Reserve Bank of India (RBI), has responded to a representation submitted by the Internet & Mobile Association of India (IAMAI), as directed by the country’s Supreme Court.

Nischal Shetty, the CEO of crypto exchange Wazirx, told news.Bitcoin.com that the representation is “a detailed document explaining blockchain, cryptos and how they function,” noting that it was “made with the belief that if the RBI gets a deep understanding of blockchain and crypto then they may go easy on the ban and think about regulations.”

Indian Central Bank Responds About Crypto RestrictionsThis representation was sent to the central bank on July 3 during the IAMAI petition hearing. The Court ordered the central bank to reply within seven days. On July 11, RBI finally sent its response to the association.

According to Sohail Merchant, the CEO of Indian crypto exchange Pocketbits, RBI’s reply is a “2 page generic response.” While stating that “as of now the response cannot be made public” but there is “not much to read though,” he commented:

IAMAI received the response from RBI as directed by SC [Supreme Court], the response is generic with the same language as the public circulars. They have not even given deliberate thought to the points made by us, all the basis of their arguments is ‘Investor Protection.’

Shetty reiterated, “RBI has responded to IAMAI…They aren’t changing their stand.”

Until Next Hearing on July 20

The central bank issued a circular on April 6 banning all financial institutions under its control from providing services to companies dealing in cryptocurrencies, including crypto exchanges.

Indian Central Bank Responds About Crypto RestrictionsRBI gave banks three months to sever their relationships with crypto businesses. As the ban went into effect on July 5, banks began closing accounts of crypto exchanges. One by one, the exchanges stopped supporting fiat deposits and withdrawals.

To bypass banking restrictions, a number of exchanges are launching peer-to-peer (P2P) trading services. Koinex and Coindelta are reportedly launching their P2P services on July 15. Wazirx, on the other hand, already launched its P2P service. The company wrote, “Wazirx P2P goes live today, 10th July at 3PM. With Wazirx P2P, a buyer and seller can buy and sell cryptos for INR directly with each other.”

Meanwhile, industry participants and stakeholders are trying to get the RBI ban lifted by filing petitions with the Supreme Court, which will all be heard on July 20.

Do you think RBI will soon lift the banking ban on crypto? Let us know in the comments section below.


Images courtesy of Shutterstock, IAMAI, and the RBI.


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Special Unit Formed to Investigate Crypto Cases in India

Special Unit Formed to Investigate Crypto Cases in India

A special investigations unit has been set up in the Indian state of Maharashtra where there is a rise in bitcoin-related scams. The unit will take over the investigation of all cases relating to cryptocurrency in the state that are currently handled by various police departments.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Special Unit Formed for Crypto

Minister Deepak Vasant Kesarkar, a member of the 13th Maharashtra Legislative Assembly, made a statement regarding cryptocurrency cases in his state on Tuesday. The Pune Mirror quoted him replying to a Calling Attention motion tabled by the opposition leader in the Legislative Council:

A special investigative team (SIT) will be formed to investigate all cases related to cryptocurrency, including bitcoin, in Maharashtra…The SIT will take over investigations currently being done by various units of the state police.

He explained that the new unit will be headed “by an official of the rank of additional director-general of police,” adding that it has been given three months to research all of the companies “that have cheated investors in the name of cryptocurrency.”

Panel to Probe Scams

Special Unit Formed to Investigate Crypto Cases in IndiaThe Maharashtra government has also decided to conduct an inquiry using “a panel headed by additional director general of Economic Offence (EO) Prabhat Kumar,” DNA publication detailed.

“The panel will be entitled to coordinate with central agencies including Enforcement Directorate (ED) for probe in such scams.”

Kesarkar told the news outlet:

Already such cases were reported in Thane, Pune, Nanded and Kolhapur where members of public have been allegedly cheated through cryptocurrency.

The Pune Mirror elaborated, “It is estimated that investors from the state were cheated to the tune of around Rs. 2,000 crore [~US$2,906,400] in cryptocurrency trade,” adding that “the most common method of cheating was offering high returns under the multi-level marketing (MLM) scheme.”

Other Recent Crypto Fraud Cases

Special Unit Formed to Investigate Crypto Cases in IndiaLast week, the Indian Congress party alleged that some of the top BJP party leaders are involved in a bitcoin scam in Gujarat. The Financial Express quoted a Congress spokesperson saying there were “reports of the state police blackmailing some businessmen in Surat for extortion and named a former BJP legislator as one of the kingpins.”

On Monday, a city sessions court refused bail to seven police officers who were arrested in connection with a bitcoin extortion case in June, according to the Times of India. They were accused of being part of the police team that allegedly abducted and detained Surat-based builder Shailesh Bhatt and forced him and his business partner Kirit Paladiya to transfer 200 BTC.

The move by the Maharashtra government came just four days after the crypto banking ban by the Reserve Bank of India (RBI) went into effect.

What do you think of the special unit set up to investigate crypto cases? Let us know in the comments section below.


Images courtesy of Shutterstock and Wikipedia.


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Zebpay Shuts Down Fiat Withdrawals Amid the India Crypto Banking Ban

Zebpay closes fiat

Zebpay closes fiat: The largest cryptocurrency exchange in India, Zebpay, has suspended fiat deposits and withdrawals as a result of the India crypto banking ban.

Dear User,
Today we are disabling the rupee deposit and withdrawal options on the Zebpay app. This is being done in light of the bank account closures as per the RBI guideline.
More details here: https://t.co/bptLZXFL7R pic.twitter.com/NEvVNHgJiP

— zebpay (@zebpay) July 4, 2018

Zebpay Closes Fiat: Deposits and Withdrawals Suspended

Zebpay users will not be able to withdraw rupees until the cryptocurrency exchange finds a ...

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Indian Supreme Court Heard Crypto Petition but Upholds RBI Ban – Effective in 2 Days

Indian Supreme Court Heard Crypto Petition but Upholds RBI Ban - Effective in 2 Days

The Indian Supreme Court heard one petition against the crypto banking ban by the country’s central bank today. However, the court did not grant a stay and the ban is set to proceed as planned, prompting crypto exchanges in the country to start implementing their solutions for banking alternatives.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

No Stay Granted by Supreme Court

The Supreme Court of India heard one petition against the crypto banking ban imposed by the Reserve Bank of India (RBI) on Tuesday, July 3. This petition is by the Internet and Mobile Association of India (IAMAI) whose members include major crypto exchanges in the country such as Unocoin, Zebpay, and Wazirx.

Indian Supreme Court Heard Crypto Petition but Upholds RBI Ban - Effective in 2 DaysThe central bank issued a circular on April 6, banning all financial institutions under its control from servicing cryptocurrency companies. The ban is set to take effect on July 5. A number of industry participants have petitioned against the ban. Other than the petition by IAMAI, there are four other petitions which the Supreme Court will hear on July 20.

Wazirx’s founder and CEO, Nischal Shetty, shared with news.Bitcoin.com after Tuesday’s hearing that the Supreme Court did not grant a stay on RBI’s crypto banking ban. The IAMAI petition will now be heard along with the rest of the petitions on July 20. “All eyes are on the 20th now,” he emphasized, elaborating:

The IAMAI had [also] submitted a representation to the RBI which was a detailed document explaining blockchain, cryptos and how they function. The RBI has said it will respond to that within 7 days….The representation was made with the belief that if the RBI gets a deep understanding of blockchain and crypto then they may go easy on the ban and think about regulations.

RBI’s Ban Effective July 5 – What Will Banks Do?

Prior to Tuesday’s hearing, industry participants were hopeful that the court may grant a stay on the RBI ban. Nonetheless, major crypto exchanges in the country have been trying to find banking alternatives.

Indian Supreme Court Heard Crypto Petition but Upholds RBI Ban - Effective in 2 DaysWazirx is preparing to launch a P2P crypto transfer service to allow its customers to buy and sell crypto through its escrow service, bypassing the RBI ban. Shetty told news.Bitcoin.com that the new service will launch when banks stop providing services to crypto exchanges. He detailed:

If banks stop providing services after July 6th then we’ll need to launch P2P. All eyes are on banks now to see what they will do. Do they wait for the July 20th hearing or do they go ahead and implement the ban on transactions from July 6th onwards?

Crypto exchange Koinex is also preparing to launch their own P2P network called Loop. The exchange has already launched a crypto-to-crypto trading platform, as did Unocoin and Zebpay.

Unocoin’s CEO and co-founder, Sathvik Vishwanath, also told news.Bitcoin.com last week that his exchange is working on banking alternatives. “Due to the RBI’s recent notification on ‘Prohibition on Dealing in Virtual Currencies’, our banking relationships are likely to be disrupted on or before July 5th, 2018. We are in the process of deploying new mechanisms for INR deposits and withdrawals,” his exchange announced.

What do you think of the Supreme Court’s decision today? Let us know in the comments section below.


Images courtesy of Shutterstock and Wazirx.


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Major Indian Cryptocurrency Exchange Shares What to Expect When RBI Ban Begins

Major Indian Cryptocurrency Exchange Shares What to Expect When RBI Ban Begins

The banking ban by India’s central bank is set to begin on July 5. One of the largest crypto exchanges in the country, Unocoin, is working on banking alternatives. News.Bitcoin.com spoke with the exchange’s CEO about what to expect when the ban begins, trader sentiment, and possible ways to bypass the ban.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

RBI Ban Impending

Major Indian Cryptocurrency Exchange Shares What to Expect When RBI Ban BeginsThe crypto banking ban mandated by the Reserve Bank of India (RBI) is set to take effect on July 5, according to the central bank’s circular issued on April 6. There are five known petitions against the ban that the Supreme Court will hear on July 20, with one exception. The petition by the Internet & Mobile Association of India (IAMAI) will be heard on July 3.

One of India’s largest cryptocurrency exchanges, Unocoin, is a member of IAMAI, as are some other major crypto exchanges including Zebpay and Coinsecure.

Speaking with news.Bitcoin.com on Saturday, Unocoin’s CEO and co-founder, Sathvik Vishwanath, explained that the sentiment among Indian traders “is quite weaker than before.” He elaborated that banks would not support crypto exchanges’ customers “to send and receive INR as it would still violate the RBI policy which not only restricts entities but also individuals.” The CEO added:

All customers are expecting the exchanges to figure out the alternatives. Long term investors have not lost hopes…From the effective date [RBI’s ban], the businesses will have tough time till the alternative methods have been figured out.

Major Indian Cryptocurrency Exchange Shares What to Expect When RBI Ban BeginsThe Bangalore-based crypto exchange, with about 370,000 unique users, recently launched a crypto-to-crypto trading platform called Unodax.

Several other crypto exchanges in India have similarly launched all-crypto platforms, including Zebpay and Koinex, with the hopes that investors will continue to trade cryptos even without banking support. However, Vishwanath revealed to news.Bitcoin.com:

The alternative revenue paths like crypto-to-crypto exchange do not have any traction in India as of now.

Unocoin Working on Banking Alternatives

Unocoin announced this week that it is working on banking alternatives for when the RBI ban takes effect. “Due to the RBI’s recent notification on ‘Prohibition on Dealing in Virtual Currencies’,” the exchange warned:

Our banking relationships are likely to be disrupted on or before July 5th, 2018. We are in the process of deploying new mechanisms for INR deposits and withdrawals.

The exchange also clarified, “This is not a small undertaking and it will take us some time to deploy new solutions.” Customers can still deposit and withdraw INR “through normal banking channels” until further notice. Vishwanath confirmed, “There are some third-party dependencies to be resolved before we can implement these [mechanisms].”

One Financial Institution Not Under RBI

One financial institution stands out as a possible banking alternative for crypto firms. Gangtok-based State Bank of Sikkim (SBS) is a lender that is not regulated by RBI and therefore is not affected by the ban.

Major Indian Cryptocurrency Exchange Shares What to Expect When RBI Ban BeginsIn a reply to a right to information application filed by a New Delhi-based lawyer in April, the central bank wrote, “it may be noted that SBS was constituted in terms of the State Bank of Sikkim Proclamation, 1968. SBS is not licensed under Section 22(1) of the Banking Regulation Act, 1949 by Reserve Bank of India. Banking Regulation Act, 1949 is not yet applicable to SBS,” Quartz reported.

However, Vishwanath told news.Bitcoin.com:

The [SBS] bank has made a strict internal policy that they do not want to support any crypto assets businesses. So for the time being this is out of the question.

What do you think will happen when the RBI ban takes effect? Let us know in the comments section below.


Images courtesy of Shutterstock and Unocoin.


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India’s Central Bank Banned Cryptocurrency with Zero Research or Consultation

The Reserve Bank of India has responded to a query seeking explanations for its reasons to ban banks from dealing with the cryptocurrency industry, admitting it conducted no research prior to its prohibitive action. In a Right to Information (RTI) request filed by a domestic lawyer Varun Sethi, the Reserve Bank of India was –

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Reserve Bank of India Admits Issuing Crypto Ban Without Research

Reserve Bank of India Admits Issuing Crypto Ban Without Research

RBI, the central bank of India, has not made a proper effort to thoroughly research the nature and usage of cryptocurrencies before issuing its crypto ban. This is according to a reply sent by the bank to a Right to Information query filed by a lawyer. Copies of the communication have been distributed on social media and published by local crypto outlets.

Also read: Pakistanis Find Ways to Trade Bitcoin Rendering Ban Ineffective

The Right to Know Why

On April 5 of this year, India’s central bank issued a controversial decree directing all regulated financial institutions to quit providing services to businesses dealing in cryptocurrencies such as bitcoin, giving banks three months to comply. The move was formally motivated by the need to protect consumers and prevent money laundering. The Reserve Bank of India (RBI) also announced the formation of a working group to study the feasibility of issuing a state-backed cryptocurrency.

This week, however, it became evident that the RBI has not made any serious effort to thoroughly study and understand the nature, principles, and usage of cryptocurrencies before issuing the ban. No internal committee had been formed to investigate the purported risks associated with trading digital coins and no officer or team of experts had been tasked to produce a substantiated decision. Indian exchanges and individual traders were hit hard by the measure. The ban has been challenged in the Supreme Court, and some trading platforms have decided to leave the country in search of more favorable jurisdictions.

Reserve Bank of India Admits Issuing Crypto Ban Without ResearchEarlier today, a Twitter user, @Blockchainlaw91, posted the Right to Information enquiry filed with the RBI, along with the reply sent back by the central bank. According to Kunal Barchha, cofounder and director of the company behind the upcoming crypto exchange Coinrecoil, the author of the query is Mr. Varun Sethi, an Indian blockchain lawyer. Coinrecoil’s operator, Kali Digital Eco-Systems, has appealed to the High Court in Delhi against the recent RBI crackdown.

Q&A with a Central Bank

Mr. Sethi has asked the RBI several relevant questions, including if there was any committee constituted within the RBI that had determined the risks being associated with trading in virtual currencies. He also wanted to know how these risks were determined, and if any responsibility has been entrusted to an officer or a team to understand the nature, working of cryptocurrencies and the possibility of their usage in India, the local outlet Crypto News reported.

To all of these questions the RBI has replied negatively and done away with referencing its multiple circulars mentioned as justifications for its actions. The bank has also noted that it “was a member of the Inter Disciplinary Committee constituted by the Finance Ministry and the Indian government in March, 2017, to examine the status of virtual currencies and suggest regulations,” as if that provides enough legitimacy to issue a ban.

Reserve Bank of India Admits Issuing Crypto Ban Without Research

The RBI also admits it has done no research before reaching a conclusion on its stance when it released a circular on December 24, 2013, reading that “The Reserve Bank of India has today cautioned the users, holders and traders of virtual currencies (VCs), including bitcoins, about the potential financial, operational, legal customer protection and security related risks that they are exposing themselves to.”

The window provided by India’s central bank for financial services providers to comply with its directive ends on July 5. By now it’s obvious that the RBI has neither done any research in regards to cryptocurrencies, nor has it contacted any foreign counterparts in order to understand how the crypto technology works before taking its decisions.

Why the Fight

Reserve Bank of India Admits Issuing Crypto Ban Without Research
Kunal Barchha

Speaking to news.Bitcoin.com, Coinrecoil’s cofounder, Mr. Kunal Barchha, explained why the Indian crypto community is waging the struggle against the RBI’s ban: “The foremost reason we are fighting is because we know that banning is next to impossible and it will make things worse for everyone – for the Reserve Bank, for the government, for the tax department, and for the user. In addition, it will push India back in reference to blockchain adoption across the world. We always have an option to relocate to other country to carry our business, but that’s not the solution. If we cannot convince our own government, we cannot expect other governments to support us.”

Central banks do have authority to ban or restrict commercial banks from a certain industry only when it is declared as completely illegal, Barchha noted. “In the case of bitcoin or cryptocurrencies, that process is completely missing, as the government of India has not yet declared cryptocurrencies illegal and so we have challenged the RBI’s circular,” he explained.

Coinrecoil’s director also shared that “The Supreme Court of India has instructed every High Court in the country to transfer pending petitions against the circular to it and thus our petition is also now in the Apex court.” Kunal Barchha added that the next hearing is scheduled for July 20, which is two weeks after the deadline of the ban. “For the same, we are in talks with our lawyers to see if we can request the court to hear us before the circular comes into effect,” he revealed.

Do you think the failure of RBI to understand cryptocurrencies is the main reason for the crackdown on the industry in India? Share your thoughts on the subject in the comments section below.


Images courtesy of Shutterstock, Twitter (@Blockchainlaw91), Linkedin (Kunal Barchha)


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Indian Crypto Exchanges Engage with RBI to Offer Banking Ban Alternatives

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban Alternatives

Indian cryptocurrency exchanges have followed the Supreme Court’s suggestion for them to present their cases to the Reserve Bank of India. They have sent letters to the central bank, offering alternatives to the RBI’s banking ban.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Supreme Court’s Suggestion

Cryptocurrency exchanges in India have reportedly sent their pleas to the Reserve Bank of India (RBI) as directed by the Supreme Court’s ruling last month.

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban Alternatives
Indian Supreme Court.

The central bank mandated in April that all financial institutions under its control must stop servicing cryptocurrency exchanges and other crypto-related businesses within three months. Some crypto exchanges subsequently took the RBI to court; their writ petitions were passed to the Supreme Court.

The country’s top court decided to hear all the petitions against the RBI ban on July 20 and ordered concerned parties to engage with the central bank to consider their requests. The Supreme Court “allowed cryptocurrency exchanges, their shareholders, traders and other individuals to present their cases within two weeks to the RBI, which will look into the issue in accordance with the law,” as news.Bitcoin.com previously reported. Quartz elaborated:

The supreme court suggested that these exchanges can engage with the RBI. So, last week, a clutch of such firms sent out letters making their case against the banking regulator’s prohibitory order.

Crypto Firms’ Requests

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban AlternativesVarious suggestions were presented to the RBI. According to the news outlet, some of “the bitcoin exchanges have requested the RBI to remove the blanket ban, saying the regulator should instead enforce it only on firms violating the norms.”

A petitioner explained to the publication, “we have also suggested measures that we are ready to take to improve the KYC-AML [Know Your Customer – Anti-Money Laundering] norms, such as including passport details as well. We are also ready to take any suggestion that the regulator has to offer that can address their concerns.”

Anirudh Rastogi, TRA Law’s managing partner who filed the supreme court petition representing four exchanges, told the news outlet:

A ban is counter-productive, therefore, we have suggested that there should be appropriate regulations that can address the government or the central bank’s concerns.

“Other firms have asked for an extension on the deadline,” the publication wrote, adding that it has reviewed an application submitted by Kali Digital Eco-systems Private Limited to the RBI. The document states that “considering the next date of the hearing in the supreme court is after July 06, 2018,” the firm requests the central bank “to extend the time of three months granted in the captioned circular to at least Aug. 31, 2018.”

Coping with RBI Ban

Five writ petitions have been filed, as news.Bitcoin.com previously reported. Last month, the Supreme Court mandated that no other courts shall accept any more crypto-related petitions and all existing ones were transferred to the Supreme Court.

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban AlternativesIn anticipation of the RBI order taking effect, crypto exchanges in the country are increasingly moving away from fiat, creating crypto-to-crypto trading platforms. Unocoin launched a new trading platform with 15 cryptocurrencies last week. Zebpay and Koinex have both launched crypto-to-crypto exchanges.

Currently, the Indian government is working on the regulatory framework for cryptocurrencies. It has set up a committee under Subhash Garg, the secretary of economic affairs in the finance ministry, to prepare a draft crypto law.

Do you think the RBI will reconsider the ban and accommodate the requests of crypto exchanges? Let us know in the comments section below.


Images courtesy of Shutterstock.


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Bitcoin Traders Join Supreme Court Challenge to India’s Banking Blockade

More bitcoin traders are challenging India’s directive for banks to stop financial services to cryptocurrency exchanges in the populous Asian country, with a court hearing of the challenge set for Thursday this week amid complaints that the Reserve Bank of India (RBI) is curtailing “essential” trade services. On Monday, the Economic Times in India reported … Continued

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India’s Supreme Court Keeps Ban on Banks’ Crypto Services, For Now

India’s Supreme Court Keeps Ban on Banks’ Crypto Services, For Now

According to a team of Indian lawyers, the Supreme Court of India refused request for a temporary injunction against restrictions imposed on banks regarding cryptocurrency by the country’s central bank. The Reserve Bank of India (RBI) issued a circular essentially banning crypto services, which will remain in place at least until a formal hearing.

Also read: Bitcoin’s Anonymous $55 Million Pineapple Fund Gives Final Donation

Indian Supreme Court Denies Grant of Injunction Against RBI

Crypto Kanoon (@cryptokanoon) is a group of lawyers active in the space concerned with regulatory analysis and legal awareness. They’ve been particular watchful of goings on regarding India’s central bank, RBI, and its recent circular demanding banks it serves shut down any business with cryptocurrency companies.

Through a petition challenging the RBI ban, enthusiasts hoped by this week to see some relief at the country’s highest court. An interim measure employed by most courts around the world is to cease a particularly controversial action until such time as a final decision can be made. And it was just such a move crypto advocates were hoping would be followed during the petition’s consideration: allow banks to continue serving cryptocurrency clients as they had prior to the RBI ban.

India’s Supreme Court Keeps Ban on Banks’ Crypto Services, For Now

Yesterday, the Supreme Court instead declined an interim injunction, for now allowing the RBI ban to stay in place. It was a blow to the near dozen representatives from India’s crypto community. It is important to note that such a procedural decision theoretically has no bearing on the eventual outcome of the petition for relief itself. The case will return before the Supreme Court May 17th.

The Reserve Bank of India’s circular from April ordered “with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs [(virtual currencies)] or provide services for facilitating any person or entity in dealing with or settling VCs.” The ban appears to be rather comprehensive in scope, including “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.”

Indian Crypto Community Pushes Back

West Bengal’s Dwaipayan Bhowmik was the originator of a petition, asking government to regulate cryptocurrencies such as bitcoin core (BTC). His request was to galvanize the various ministries, from the country’s Securities and Exchange Board (SEBI) to the Reserve Bank itself. Mr. Bhowmik was quoted by regional media as wishing “to prevent financial crimes such as money laundering, flesh trade, etc.”

A quirk of the judicial appeal process in the world’s second most populated country is to allow petitioners, no matter their side advocacy, to appeal together. Two petitioners are diametrically opposed on the issue, in other words, with one wanting an outright ban and the other wanting it formally recognized by the government. For his part, Mr. Bhowmik insisted he falls in neither camp. “I just want it to be regulated,” he said.

India’s Supreme Court Keeps Ban on Banks’ Crypto Services, For Now

There is yet another case, filed by crypto exchange startup Coil Recoil and various exchanges, to be heard in the Delhi High Court May 24th. The two cases are unrelated. As reported in these pages, many felt “the RBI directive is arbitrary and a violation of the Constitution of India, and the court should therefore quash it. The document presented to the count, which news.Bitcoin.com has obtained, explains that due to the RBI Circular the company will not be able to secure banking services that are imperative for the business’ operations rendering it ‘stillborn.’”

Whatever the case, May promises to be a critical month for India’s crypto community.

Do you think India’s Supreme Court will overturn the RBI ban? Let us know in the comments section below.


Images courtesy of Shutterstock.


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India Divided on Whether to Ban Crypto Use

India Divided on Whether to Ban Crypto Use

As India works on the bill to regulate cryptocurrencies, each government department has its own opinion on whether to ban the use of crypto, including bitcoin. The Finance Ministry, the Reserve Bank of India (RBI), the Income Tax Department, and the Special Investigation Team have voiced their opinions on the upcoming bill.

Also read: Russian Regulators Draft Law to Restrict Crypto Mining, Payments, and Token Sales

No Consensus Among Regulators

India Divided on Whether to Ban Crypto UseIndia is preparing a bill on the regulation of cryptocurrency. “The bill has been drafted and consultation has been started with the concerned agency,” the Navbharat Times reported last week. The news outlet quoted sources explaining that the regulators are divided on whether to ban the use of cryptocurrencies such as bitcoin.

“The finance ministry is in favor of regulating [cryptocurrency],” sources said. The Income Tax Department, on the contrary, is not in favor of regulation, the news outlet conveyed, and quoted sources explaining:

The regulation of virtual currency is almost impossible and it promotes the use of black money.

India Divided on Whether to Ban Crypto UseThe RBI “is also not in favor of banning virtual currencies,” but sources pointed out that “the current form of the bill proposes to ban virtual currency businesses.” However, there may be exemptions for “issuing crypto tokens in exchange for assets.”

Meanwhile, the Indian Special Investigation Team (SIT) “wants to ban the use of bitcoins” after discovering at least four cases where the digital currency was used to pay for drugs, the Sunday Guardian reported. The SIT comprises of officials from the Narcotics Control Bureau (NCB), the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI) and the Income Tax Department.

India Divided on Whether to Ban Crypto UseThe SIT has previously asked the ED, NCB and the Income Tax Department “to take adequate measures to prevent the use of cryptocurrencies,” the publication noted, adding that the Team “has called for a second round of meetings to be held in Delhi next month, where the officials from all the aforementioned agencies will review the use of cryptocurrencies.”

Experts Say Crypto Ban Not Very Feasible

The debate is also taking place in the private sector. Sarvesh Tyagi, a Delhi-based cyber law expert, told the Sunday Guardian that “it is doubtful that the SIT will succeed in banning the use of cryptocurrencies. Ban is not a solution. We need a regulatory authority.” She elaborated:

A blanket ban on the use of cryptocurrencies is not a very feasible solution as drug smuggling is a big problem, and in most cases, these transactions have nothing to do with use of cryptocurrencies.

Crypto Businesses Fight Back

The RBI announced earlier this month for banks and payment gateways under its control to stop providing services to businesses dealing in cryptocurrencies. “Banks have already sent notices to exchanges,” Sathvik Vishwanath, CEO of a leading Indian exchange Unocoin, told news.Bitcoin.com.

India Divided on Whether to Ban Crypto UseThe RBI allows banks “about 3 months of time to end the relationships” with crypto businesses, he noted, adding that crypto companies “will be attempting to challenge the [RBI] order” in the Supreme Court as a consortium.

One company, Kali Digital Eco-Systems, has already appealed to the High Court in Delhi against the recent RBI crackdown. The company is behind the upcoming crypto exchange called Coinrecoil.

On Sunday, the company announced that Delhi High Court has accepted its petition against the Indian regulators, adding that:

Hon’ble High Court of Delhi has issued a notice to the Reserve Bank of India, the Union of India through Secretary, Ministry of Finance and GST Council. The next hearing in this case is on May 24, 2018.

What do you think of the Indian regulators’ divided opinions on how to regulate cryptocurrencies? Let us know in the comments section below.


Images courtesy of Shutterstock and the Indian government.


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Indian Exchange Takes Central Bank to Court Over Bank Ban

Indian Exchange Takes Central Bank to Court Over Bank Ban

The Indian bitcoin community keeps fighting for their rights to operate freely in the country like any other industry. The latest show of defiance is a petition to the court against the actions of the Reserve Bank of India by the operators of a local exchange.

Also Read: SPI Solar to Host 5,000 Bitcoin Miners for Chinese VC Fund 500 IPO

RBI Ban Unconstitutional

Indian Exchange Takes Central Bank to Court Over Bank BanKali Digital Eco-Systems, the company behind the upcoming cryptocurrency exchange Coin Recoil, has appealed to the High Court in Delhi against the recent crackdown on banks providing services to bitcoin related companies by the Reserve Bank of India (RBI).

According to the petitioner, the RBI directive is arbitrary and a violation of the Constitution of India and the court should therefore quash it. The document presented to the count, which news.bitcoin.com has obtained, explains that due to the RBI Circular the company will not be able to secure banking services that are imperative for the business’ operations rendering it “stillborn.” It argues that the ban is unconstitutional on two main grounds.

Freedom of Occupation

Indian Exchange Takes Central Bank to Court Over Bank BanArticle 19 of the Constitution of India guarantees citizens’ rights to carry on any occupation, trade or business. But by preventing exchanges’ access to baking services the government is in affect preventing people from engaging in the business of their choice.

Article 14 prohibits discrimination based on arbitrary and unreasonable classification. The petition explains that the RBI did not provide a clear definition of what constitutes ‘virtual currency’ and that this ambiguity dilutes any reasonability in what may be alleged as a classification. For instance, reward points such as airline miles may also be unreasonably construed as virtual currencies.

Two months ago the Supreme Court of Israel issued an injunction order forbidding one of the biggest banks in the country from halting the account activity of a local bitcoin exchange. This was a major victory for the Israeli cryptocurrency industry that set a precedent for other bitcoin businesses struggling to get banking services in the country. Hopefully the Indian high court will follow this example, even though there is a difference between the authority of a commercial bank and a central bank. Meanwhile, over 42,000 Indians have now signed an online petition that against the RBI directive.

How likely is the Indian high court to rule against the country’s central bank? Share your thoughts in the comments section below. 


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