India’s central bank told the country’s supreme court on Friday that “allowing dealings in cryptocurrencies like bitcoin would encourage illegal transactions.” Other crypto petitions being heard include one asking the government to “take emergency steps to restrain the sale and purchase of illegal cryptocurrencies.”
The Reserve Bank of India (RBI), the country’s central bank, appeared before the supreme court Friday to defend its position regarding cryptocurrencies. RBI issued a circular on April 6 banning financial institutions under its control from providing services to crypto companies.
According to the Economic Times, the central bank told the court:
Allowing dealings in cryptocurrencies like bitcoins would encourage illegal transactions and it has already issued a circular prohibiting use of these virtual currencies.
RBI explained that crypto is “a stateless digital currency” that operates independently of a central bank such as itself, thereby “rendering it immune from government interference,” the news outlet noted.
The Financial Express elaborated that the central bank believes “it is necessary to regulate the bitcoin and other cryptocurrencies to check illegal transactions which will impact the international flow of funds.” Senior counsel Shyam Divan, appearing for RBI, reiterated that the central bank has a particular stance and other departments may have other positions.
Petitions Being Heard
Petitions against the RBI crypto banking ban are not the only ones that the supreme court is hearing. The Economic Times described:
Some petitions challenged the use of virtual currencies and alleged that they posed grave dangers to the traditional economy and they also sought framing of guidelines to regulate them … They also sought a direction for the Centre to take emergency steps to restrain the sale and purchase of illegal cryptocurrencies.
The Hindu pointed to one particular petition, filed by father and son Siddharth Dalmia and Vijay Pal Dalmia. “Mr. Dalmia, in his plea, has sought a direction to the Centre to take steps to restrain sale and purchase of illegal cryptocurrencies like bitcoins, which were being traded openly for ‘illegal activities’ like funding terrorism and insurgency,” the publication wrote.
The supreme court already heard the duo’s initial petition in November last year and subsequently issued notices to various government departments including RBI. The central bank responded at the time that it had warned people against the usage and risks associated with crypto. However, the Dalmias were not happy with RBI’s reply and filed a new petition, pointing out the inadequate action by the central bank.
At the hearing on Friday, the supreme court gave the government until September 11 to respond to all petitions.
What do you think of RBI’s view and action? Let us know in the comments section below.
Images courtesy of Shutterstock and RBI.
Need to calculate your bitcoin holdings? Check our tools section.