According to the RBI, (Reserve Bank of India) the country cannot recognize cryptocurrency. These were the views of India’s Central Bank during a hearing before the Supreme Court on Wednesday regarding cryptos.
The Case surrounding Cryptos
A number of exchanges initiated the case against the RBI. This followed after the bank blocked their access to banking services. The RBI maintains that cryptos are not currencies according to current regulations.
The central bank states that “cryptocurrencies fall short of being true currencies.”
Furthermore, the RBI states that it does not consider Bitcoin “currency” under the extant laws. “There are no enabling provisions under the extant law to treat Bitcoin as currency,” it continued.
The Central Bank also said that cryptos are peer-to-peer networks. “They can’t even be considered as a valid payment system,” since they are not under the control of a service provider.
The bank further mentions that consideration as a “valid currency”, requires cryptos to possess characteristics similar to that of cheques, postal orders and money orders.
Led by Exchanges
The next hearing on September 17 will take this matter further. In April this year, the RBI instructed domestic banks and institutions to discontinue crypto exchanges throughout the country.
Later the same month, Kali Digital Ecosystems filed a petition against the RBI. The firm was planning to initiate an exchange called CoinRecoil in August.
The company states that it is unable to begin operations due to the restrictions imposed by the RBI.
Other exchanges soon followed suit and filed petitions requesting the court to overturn the ban on cryptos. At the Moment the Supreme Court is considering these requests.
The crypto exchanges in the country had to drop the fiat to crypto trading services following the ban. They are currently only able to offer crypto to crypto trading services to their clients.
It is important to realize that trading volumes saw a major dip and the future of the exchanges remain uncertain in the wake of the RBI circular.
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