Three Days From Hearings Before India's Supreme Court on Crypto Ban

The Supreme Court of India has wrapped up the first three days in a hearing on a landmark case brought against the country's central bank against its ban on banks' dealings with cryptocurrency-related businesses.

From Jan. 14 through 16, proceedings were focused on arguments presented by Ashim Sood, the legal counsel for the the Internet & Mobile Association of India.

On the heels of both public and industry-led petitions, the IAMAI is levelling a case against RBI's controversial imposition of a blanket ban on banks' dealings with crypto businesses back in April 2018, which came into effect in July of that year.

Sood's preliminary presentation detailed the effects of RBI's ban thus far and gave a brief overview on the nature of cryptocurrencies, as well as outlining the potential for distributed ledger technology to enhance data integrity and throughput and efficiency in financial services.

Tackling the circular, Sood argued that RBI has overstepped its bounds as a regulator, straying into areas that should strictly fall under the regulatory purview of the Securities and Exchange Board of India.

As regards money laundering and terrorism financing, Sood noted that countries globally are availing themselves of cybersecurity requirements, licensing rules, capital requirements and other measures to regulate entities in the crypto sector under existing laws.

In an argument that drew on many of these contentions, Sood said that where the state's reluctance to devise regulation does not therefore confer on it the right to simply ban an activity.

As the Court proceeds to hear the rest of the proceedings in the RBI case, the legal and regulatory climate in India remains uncertain.

As Sood noted in his presentation, in fall 2019 the Indian government opted to delay the introduction of a draft bill on a potential cryptocurrency ban to parliament in the 2019 winter session.

The bill - entitled "Banning of Cryptocurrency & Regulation of Official Digital Currencies" - reportedly intends not only to impose a complete ban on the use of crypto in India but also to establish the foundations for a state-backed "Digital Rupee" issued by the Reserve Bank of India.