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.”
The central bank was pointing out risks of Money Laundering
Money Laundering
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Read this Term 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.
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.”
The central bank was pointing out risks of Money Laundering
Money Laundering
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Read this Term 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.
