Today marks the official implementation of the Reserve Bank of India’s (RBI) prohibition on providing services to crypto-related businesses. Despite companies making a last-ditch effort to remove the ban, India’s Supreme Court, led by Chief Justice Dipak Misra, ruled that the ban will stay.
The ban was first announced in April 2018, and financial institutions and cryptocurrency exchanges have since tried to legally fight it. Still, on 3 July India’s Supreme Court held that the ban would go into effect as of 6 July, despite many companies arguing they need more time.
“This [the Supreme Court action] is a big blow to not only cryptocurrency trading platforms, but also individuals holding cryptocurrency. The choking of banking channels means that virtually all cryptocurrency related transactions will have to be done in cash or not at all,” Rashmi Deshpande, associate partner, Khaitan & Co, told The Hindu.
The ruling has already impacted cryptocurrency exchange Zebpay who has warned its customers, “If you are holding any rupees, or depositing any rupees in Zebpay, there could soon come a time when we may not be able to honor withdrawal requests. Please continue only if you understand this risk.”
According to Unhashed, “The central bank has also been actively drawing attention to the recent security issues and price volatility of cryptocurrency to embolden the skepticism of India’s policymakers.” As a result of the ban being upheld, many suspect that cryptocurrency traders will resume business in the black market.
In an effort to confront growing concerns over virtual currency and the attempts to ban them altogether, the EU released a lengthy paper entitled, Virtual Currencies and Central Banks Monetary Policy: Challenges Ahead.
While advocating for regulations, the 33-page paper noted, “Transactions in VCs also offer increased anonymity resulting in the higher security of personal data and limited interference by public authorities.” The document also asserted that, “Policy makers and regulators should not ignore VCs, nor should they attempt to ban them. Both extreme approaches are incorrect.”