As the debate on the Indian crypto ban is heating up in court, the Reserve Bank of India (RBI) clarified that digital currencies are not banned in the country, but banking support on their trading is.
As reported by local news daily Economic Times on Tuesday, the clarification was made by the central bank to the Indian supreme court of the country in an affidavit submitted on September 4.
“Firstly, the RBI has not prohibited VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it to not provide services to those persons or entities dealing in or settling VCs,” the 30-page long affidavit read.
“The RBI has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.”
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The central bank was pointing out risks of money laundering and terror financing as the reason behind restricting banking services on the globally booming industry. It also pointed out the risk on the banks due to the volatile nature of crypto prices.
The Indian apex court is already in the process of hearing petitions of multiple digital assets exchanges against the order of the RBI on crypto.
On-going hearing on the crypto ban
As Finance Magnates reported, the lawyer representing crypto exchanges made some strong arguments before the court last week questioning the jurisdiction of RBI in regulating, specifically banning, digital assets which it does not even recognize as currency.
In his budget speech in 2018, then-Finance Minister of the country also declared crypto as illegal tender. However, he also did not mention anything about a blanket like China.
The court is yet to hear the side of the central bank, justifying its restriction to banks on their business with crypto entities. It will be interesting to follow the progress of the hearing of the court case against the order, which is expected to end by this week.