TelecomLive April-2020

Cryptocurrency Telecom LIVE April 2020 50 www.telecomlive.com namely, the nationalized banks / scheduled commercial banks / co- operative banks / NBFCs has suf- fered any loss or adverse effect directly or indirectly, on account of the interface that the virtual cur- rency (VC) exchanges had with any of them." The Internet and Mobile Associ- ation of India (IAMAI), whose members include cryptocurrency e x c h a n g e s a n d o t h e r s h a d approached the top court objecting to a 2018 RBI circular directing regulated entities to not deal with cryptocurrencies. IAMAI submitted that RBI lacked jurisdiction to forbid deal- ings in cryptocurrencies. The blan- ket ban was based on an erroneous understanding that it was impossi- ble to regulate cryptocurrencies. The petitioners had argued that the R B I ' s c i r c u l a r t a k i n g cryptocurrencies out of the banking channels would deplete the ability of law enforcement agencies to regulate illegal activities in the industry. IAMAI had claimed the move of RBI had effectively banned legitimate business activity via the virtual currencies. The RBI on April 6, 2018, had issued the circular that barred RBI- regulated entities from "providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies". In January, RBI had told SC in an affidavit, 'It has not banned cryptocurrencies, but only ring- fenced regulated entities from associated risks.' The judgment is considered a huge win for crypto investors and startups who are working on new ways to build business backed on blockchain and t ok en s . I nd i an Startups which moved out of the country should now come back and set up shop in India. VCs also would start looking at investment in crypto startups. Industry bodies and f o u n d e r s o f c r y p t o c u r r e n c y exchanges have said that the verdict would help in shaping d i s c u s s i o n s o n r e g u l a t i n g cryptocurrency trade in the country and opening up the Indian market to global crypto trade. Exchanges are eager to launch trading in cryptos. Many exchanges have shifted their base to Singa- pore, Malta, or Malaysia. The pro- moters of one of the largest exchanges, Zebpay, recently sold their stake to overseas investors and under new promoters, Zebpay will offer crypto-to-crypto trading. Now, such exchanges can allow buying and selling cryptos against money, subject to KYC and banks opening their current accounts. However, a clarity is awaited on whether the parliament would be discussing a draft bill banning the use of cryptocurrency as legal ten- der in India. In February 2019, an inter-ministerial panel, comprising officials from the financeministry's department of economic affairs, the ministry of information tech- nology and RBI, set up by the gov- ernment on virtual currencies, had submitted its report where it pro- p o s e d b a n n i n g o f p r i v a t e cryptocurrencies, barring any digi- T he Supreme Court has revoked the ban of c r y p t o c u r r e n c y i m p o s e d b y t h e Reserve Bank of India (RBI) in 2018. Pronouncing the verdict, the three-judge bench of the apex court said the ban was 'disproportionate and unreason- able'. The bench included Justice Rohinton Fali Nariman, Justice S Ravindra Bhat and Justice V Ramasubramanian. This has given a major relief to exchanges dealing in these crypto currencies. It opens a window for developing a market for crypto currencies, which are formally traded in derivatives markets in the US, with Chicago Mercantile Exchange (CME) allowing trade in them. Crypto currencies are virtual currencies and are a digital repre- sentation of value. They can be digitally traded and can function as a medium of exchange and/or a unit of account and/or a store of value, though they do not have the status of legal tender. In a 180-page judgement, the court said, "The petitioners are ent i t l ed t o succeed and the impugned Circular dated April 6, 2018 is liable to be set aside on the ground of proportionality. Accord- ingly, the writ petitions are allowed and the circular dated April 6, 2018 is set aside." “When the consistent stand of RBI is that they have not banned virtual currencies and when the government of India is unable to take a call despite several commit- tees coming up with several pro- posals, including two draft bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate," said the top court. The judgement also noted, "RBI has not come out with a stand that any of the entities regulated by it Cryptocurrency SC strikes down RBI's ban, but govt may bring legislation to reverse the order