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Nakamoto Shallot (ID: xcongapp)
Nakamoto Shallot (ID: xcongapp)
, Author: Yaoping, published by Odaily with authorization.
Two weeks ago, the Supreme Court of India announced the cancellation of the ban on cryptocurrencies by the Reserve Bank of India (RBI).
The lifting of the ban means that local encryption companies in India can finally regain access to banking services. Exchanges that were forced to close due to limited financial service channels can also reopen and continue to provide cryptocurrency services to the Indian market of 1 billion people.
However, it turns out that the lifting of the RBI ban has not been positively reflected in the encryption market, and there are indications that the future development of the Indian encryption industry is still in danger.
Xiaocong published an article last week analyzing the game process of the "legal tug-of-war" between the Indian encryption industry and the Indian central bank. It can be seen from this that the judgment of the Supreme Court of India is only a judgment on multiple appeals against the RBI ban , does not represent the attitude of the entire Indian regulatory authority towards cryptocurrencies.
India’s regulatory bill on cryptocurrencies has not yet been introduced, and the legal status of cryptocurrencies in India is still unclear; and the Indian central bank is still substantially restricting banks and other financial institutions under its supervision to provide service support for the encryption industry, and intends to submit a review on this judgment. According to the application for review, this staged result obtained after 23 months of gaming is not stable.
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The ban is gone but the influence of the RBI is still there: major banking institutions have not yet resumed crypto services
As we all know, the main obstacle to the development of the encryption industry brought about by the ban issued by the Central Bank of India on April 5, 2018 is that the top exchanges in India are prohibited from processing deposits and withdrawals with users' bank accounts, and users cannot transfer their bank accounts. Indian rupees in the exchange are transferred to the exchange, so it is not possible to invest in cryptocurrencies.
Then the most direct expected effect of the revocation of the RBI ban is that local encryption companies in India can finally regain access to banking services, allowing more investors to invest and trade cryptocurrencies more smoothly.
But the reality is that India's major banking institutions have not resumed support for providing encrypted services, but continue to wait for the RBI's attitude to change.
Shekhar Bhandari, president of global transaction banking at Kotak Mahindra Bank, said: "We will follow the direction of the RBI on this issue and we will take appropriate action once the situation becomes clearer."
According to cointelegraph on March 13, some banks in India are still refusing to process encryption-related transactions. On March 12, financial technology industry lawyer Mohammed Danish submitted a complaint to the central bank against the "arbitrary refusal" of certain domestic banks to provide support. Services for selling or buying crypto assets.
Danish, co-founder of Crypto Kanoon, an Indian crypto regulatory news and analysis platform, said there have been several reported cases of banks continuing to refuse to process crypto-related transactions — including HDFC and IndusInd Bank, Danish wrote: “In most cases , the bank did not give any written communication, but verbally informed the customers that they are awaiting the RBI’s notification in this regard.”
This shows that even if the RBI ban is completely rejected by the Supreme Court, the major financial institutions under the supervision of the RBI still act according to the attitude of the RBI, and the RBI still exerts a substantial restraint on these financial institutions.
It is also worth noting that India is facing a serious banking crisis. On March 6, the Reserve Bank of India announced that Yes Bank, India's fourth largest bank, was taken over by the Reserve Bank of India due to insolvency.
In order to prevent the occurrence of a run, the Reserve Bank of India temporarily stipulates that depositors can withdraw cash at 50,000 rupees (about 678 U.S. dollars) in the next 30 days. At the same time, Yes Bank is the cooperative bank of India's two largest payment providers (Razorpay and Cash free), and India's online payments and transfers are also forced to be greatly affected.
Bloomberg published an article two days ago that the Indian government should consider the official cryptocurrency to eliminate the need for trusted intermediaries, because the public’s confidence in the Indian financial system has been declining, and the official cryptocurrency may be used to save market confidence.
The Reserve Bank of India has always maintained that the outbreak of cryptocurrency transactions will put the banking system and financial institutions at risk. In this environment, perhaps the RBI will adopt more stringent regulations on the financial industry.
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The role game of all parties has not stopped: the "new life" of the encryption industry may be "reversed" again
Xiaocong’s previous article “India Encryption Industry Survival | 23 Months After Breaking the Bank of India’s Ban” mentioned that the trial process of the Indian Supreme Court’s RBI ban case is also a long game process of the roles of all parties. The whole process involves several key points Roles, Central Bank of India, Indian Encryption Industry Practitioners, Central Government of India, Supreme Court of India.
The issuer of the ban (the central bank of India) and the opponent (the practitioners in the encryption industry in India) are the two sides of the direct game. This is not the end of the story, and the various actors are still making their own efforts to promote new changes that are beneficial to their own interests.
1) RBI is still trying to maintain the ban.
From beginning to end, the Reserve Bank of India believes that the cryptocurrency industry should be subject to strong supervision, and believes that cryptocurrency will lead to illegal activities such as terrorist financing, money laundering and tax evasion, and will bring unpredictable risks to the majority of users and financial institutions such as banks.
A day after India’s Supreme Court struck down the RBI’s ban on cryptocurrencies, RBI Governor Shaktikanta Das said the central bank was studying the Supreme Court’s order on cryptocurrencies.
In addition, according to a report by the Economic Times on March 6, people familiar with the matter said that the Central Bank of India plans to submit a review petition to the Supreme Court of India to oppose the Indian Supreme Court's decision to overturn the central bank's encryption ban. Abhishek A Rastogi, partner at Khaitan & Co, said: “The Supreme Court of India may be considering the RBI’s review petition, but for now crypto platforms can operate in India.”
2) The Indian government's regulatory bill for cryptocurrencies may become a new obstacle to the Indian encryption industry.
Like many other countries, the Indian government has always treated blockchain and cryptocurrencies differently. Although it vigorously supports blockchain companies, it is very cautious in regulating cryptocurrencies. An interministerial committee was formed in 2017 to work on research and make recommendations on crypto regulation.
In 2018, the government’s draft encryption regulations on “completely prohibiting the trading and issuance of various types of cryptocurrencies and shutting down all cryptocurrency exchanges” came out of the market. below.
At the end of February 2019, the Indian government announced that a draft regulation prohibiting and formally regulating cryptocurrencies had been completed and distributed to various departments for discussion. The inter-ministerial committee responsible for drafting the bill believed that all types of cryptocurrencies should be completely prohibited from buying, selling and issuing; the Supreme Court Hearings were also held on the matter, but so far inconclusive, and at the end of 2019, the Indian government stated that it would delay the introduction of the cryptocurrency bill.
According to ANI News, in response to the Indian Supreme Court’s cancellation of the Bank of India’s ban on cryptocurrencies, Indian Finance Minister Nirmala Sitharaman said on March 4 that the central government of India will study the judgment of the Indian Supreme Court to determine the next step.
In addition, the Indian parliament has yet to rule on the "Cryptocurrency Ban and Official Digital Currency Regulation Bill" drafted in 2019, a pending bill that may still hamper the adoption of cryptocurrencies in India, Business Insider reported on March 7. prosper. If passed, the bill would introduce a unique regulatory framework for virtual currencies, utility tokens and commodity-backed tokens — likely creating a complex exclusionary legislature for blockchain businesses.
It can be seen from the above that in order to maintain the stability of the domestic financial system, the Central Bank of India may file a review request for the lifting of the RBI ban. The "Cryptocurrency Ban and Official Digital Currency Supervision Bill" drafted by the Indian government in 2019 may also be officially launched on the market at any time. , The Indian encryption market will face a new reversal and game again.
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The text of the Supreme Court's judgment foreshadows: the legal status of India's encryption industry is still a question mark
In addition to the above-mentioned factors, returning to the judgment document of the RBI ban case itself, we will also find that the legal basis for the judgment of the RBI ban case is far from the imagination of people in the cryptocurrency industry.
On March 7, Tanvi Ratna, the founder and CEO of Policy 4.0 and former head of EY India's blockchain business, published a post on CoinDesk about "India's Supreme Court Overturning the Central Bank's Cryptocurrency Ban", Tanvi Ratna pointed out , the judgment is not the final decision (Scallion Note: The central bank can still submit an application for review), and there are many red flags in the text of the judgment.
After a detailed analysis of the 180-page judgment of the Supreme Court of India, Tanvi Ratna found that, in essence, the entire judgment hinges on whether the central bank violated one of the provisions of Article 19(1)(g) of the Indian Constitution. A fundamental right, namely, "freedom to practice any occupation".
Xiaocong Note: In April 2018, Indian digital currency exchange CoinRecoil submitted a petition against the RBI ban, which pointed out that RBI's ban on banks not providing services for digital currency trading platforms violates Article 19(1)(g) of the Constitution , Article 14 and Article 301. Article 19(1)(g) of the Constitution stipulates: Citizens have the right to engage in any occupation, transaction or business; Article 14 requires the prohibition of discrimination; Article 301 requires the guarantee of freedom of trade and commerce in India.
In addition, one of the important reasons for the Supreme Court's decision to revoke the RBI ban is that "there is currently no law prohibiting cryptocurrencies." This means that once the Indian government promulgates relevant laws, this judgment cannot be established.
summary
As we mentioned above, on February 28, 2019, a draft law aimed at banning cryptocurrencies submitted by the Indian government may be passed by the Indian Parliament. It can be seen that the Indian government’s regulatory bill on cryptocurrencies is the final decision A key factor in the fortunes of India's cryptocurrency industry.
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summary
The lifting of the RBI ban by the Reserve Bank of India did not significantly stimulate the market, and many banks and other financial institutions did not open their arms to the encryption industry again. In addition, if the RBI appeals again, the Indian encryption industry may face a new long game.
