The Reserve Bank of India, a powerful financial institution on the subcontinent, banned crypto businesses from using the banking system back in 2018. The bank has the authority to do so, as all central banks swing a significant bat when it comes to such decisions.
Banking Under The Radar
Crypto businesses have been allowed to live by other means, and of course there’s nothing stopping them from creating their own means.
Four crypto exchanges are suing the government for relief in the case of the RBI’s banking ban, and one of their executives provided commentary made available to BSN.
The four exchanges are Koinex, CoinDCX, Throughbit, and CoinDelta. All of them are Indian, but many of them may end up being forced to use foreign banking services, or even to relocate their exchanges to more friendly shores.
For starters, CoinDCX CEO Sumit Gupta says that exchanges are indeed able to operate without the help of the banking system. It’s just difficult. He says:
In the face of the banking ban, CoinDCX innovated and offered peer-to-peer services for buying and selling cryptocurrencies through the INR. The primary motivation for doing so was so that we may continue to provide our users with value while also respecting and abiding by the RBI’s decision. Having said that, open crypto regulation is of prime importance to the continued growth of India’s emerging crypto sector.
The Indian blockchain movement has a patchy history with the authorities, who are occasionally seen raiding Bitcoin ATM businesses or issuing summons to crypto entrepreneurs. None of which is a good look for the attraction of crypto business, that much is for sure.
Gupta believes that the Indian blockchain industry is doing its best, and that it has presented a clear argument to the Supreme Court.
As the Supreme Court hearing over the RBI’s Banking Ban resumed last Thursday, Nakul Dewan, the counsel representing the four exchanges—Koinex, CoinDCX, Throughbit, and CoinDelta—presented a strong, cohesive response on behalf of India’s crypto community, over the RBI’s arguments that crypto had no intrinsic value. Nakul Dewan also addressed the effect of the banking ban on crypto businesses, arguing that cryptocurrencies, much like fiat currencies without the backing of gold, are merely a medium of exchange.
Indian Supreme Court Could Go Either Way
The best argument in the world can be made, however, and the Supreme Court can still go the other way. There are a number of reasons this may happen. One of them is that the court may find an earlier ruling that upholds the RBI’s decision in the first place. Another is that the court may simply rule in favor of its central bank.
Meanwhile, other countries such as Singapore and Malta are building extremely blockchain friendly economies and regulatory environments.
Gupta says that he firmly believes the high court will “see reason,” and further that the blockchain industry in India will ultimately thrive.
While we do not know which way the hearings will go at this point, we believe that the judges will see reason in the arguments of both sides and provide a judgement which is fair and favourable. During the proceedings on January 23rd, we witnessed the Supreme Court judge presiding over the hearings explain how being an honest contributor to the blockchain ecosystem is more profitable for industry participants than trying to tamper with distributed ledgers. This showcases an understanding of blockchain’s underlying principles by the Supreme Court, and it is a wonderful experience to see a Supreme Court judge advocating its immutability.
Hoping for a “fair and favorable” outcome is one thing. Actually building a business on the hope of it is entirely another.
But that’s exactly what these and other exchanges in India have done. What are they to do now? Until 2018, there was no banking ban in effect.
The question becomes: how badly do central bankers want to drive money out of the country?