India’s Supreme Court has overturned the ban imposed by the country’s central bank on the dealings of local banks with crypto firms.
In April 2018, the Reserve Bank of India (RBI) had imposed a ban on local banks, preventing them from dealing with crypto firms. The ban came into effect in July of the same year.
Accordingly, the Internet & Mobile Association of India (IAMAI) filed a lawsuit against the RBI to the Supreme Court.
The court held the hearings for two weeks in January 2020.
IAMAI mainly represents customers, investors and Internet firms before policymakers.
The judges ruled that the RBI’s ban decision was “disproportionate”. The central bank argued that cryptocurrency is a digital medium of payment and that the institution was “legally allowed” in its interference.
However, Ashim Sood, counsel of IAMAI, opposed this argument, stating that they oscillate between functioning as a service or store of value and as a means of exchange.
In addition, Sood went up to say the central bank had no power to bar financial firms from providing services to crypto companies.
Future of crypto in India
After the court issued its judgment on the RBI lawsuit, India’s legal and regulatory space for cryptocurrencies now seems to be facing one final challenge.
Last year, the Indian government chose to delay submitting a bill on a possible ban of cryptocurrencies to the parliament in the winter of 2019.
Earlier, Cryptolydian reported that although cryptocurrencies are not legally prohibited in the country, the central bank’s order led to collapse of several domestic crypto platforms.
Some exchanges were forced to choose the peer-to-peer services such as WazirX. Meanwhile, other exchanges terminated their services, like Coindelta due to this worrying crypto climate in the country.
The RBI has made this clarification in response to the Indian court’s affidavit which was released on September 4.
The central bank recommended the enactment of regulations to manage and track crypto business in the country.