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India

Indian Central Bank Tells Supreme Court Cryptos ‘Not a Valid Currency’

September 14, 2018 by Mark Knowles
India central bank has argued that there is no room under the current laws to consider cryptocurrencies as an actual currency. Photo: PXHere
India central bank has argued that there is no room under the current laws to consider cryptocurrencies as an actual currency. Photo: PXHere

The Reserve Bank of India (RBI) argued before the nation’s Supreme Court this week that bitcoin cannot be recognized in the country.

The case was brought against the RBI by a number of crypto exchanges after it blocked their access to banking services about five months ago. The RBI stated in an affidavit that the country’s current legislation does not allow for cryptocurrencies to be considered as either currency or money.

“It is submitted that crypto-currencies fall short of being true currencies. It is further submitted that RBI does not consider virtual currencies such as bitcoins as ‘currency’ under the extant laws. There are no enabling provisions under the extant law to treat bitcoin as a currency,” said the RBI in a statement to the court.

According to another report from CNN the RBI also noted that as cryptos are peer-to-peer networks and not controlled by a service provider, “They can’t even be considered as a valid payment system.”

In order to gain recognition as a “valid currency” the bank said that such instruments should “possess identical or similar characteristics of cheques, postal orders and money orders.”

The next hearing on the case is scheduled for September 17. Back in April, the central bank ordered domestic banks and financial institutions to cease working with the country’s crypto exchanges.

Later that month the Indian crypto firm Kali Digital Ecosystems, which had been planning to launch an exchange called CoinRecoil in August, lodged a petition against the RBI.

According to the text of the petition, Kali requested “an appropriate writ, order or direction quashing the [RBI’s] circular.” It stated that the ban is “arbitrary and unconstitutional” and that the company is unable to begin operating due to the RBI’s restrictions.

The issue has since been targeted with petitions by other exchanges seeking to overturn the ban, which the Supreme Court is also hearing.

The RBI circular has effectively forced exchanges to drop rupee-to-crypto trading services, and they must now rely on crypto-to-crypto trading. But as a result trading volumes have taken a big hit and the companies face a bleak future unless the RBI decides to overturn the ban.

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Mark Knowles

Mark Knowles, Coinlaw

With more than a decade of experience as a journalist and editor, Mark has now turned his focus to the blockchain and cryptocurrency revolution that is currently reshaping the global... view profile
Mark Knowles is a member of the Coinlaw team. Read more about our team.

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