The Reserve Bank of India (RBI) previously issued a circular in April 2018 that banned the trading of cryptocurrencies in the country. On March 4, however, the Supreme Court of India lifted this ban, allowing cryptocurrency trading.
The Court contested that the RBI’s circular was liable to be set aside on “ground[s] of proportionality.” The judgment stated:
“When the consistent stand of RBI is that they have not banned VCs [Virtual currencies] and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions, it is 115 (2013) 8 SCC 519 178 not possible for us to hold that the impugned measure is proportionate.”
IMAI, three-judge panel vs. RBI
The circular was challenged by the Internet and Mobile Association of India (IMAI), together with a three-judge panel: Justices R.F. Nariman, Aniruddha Bose, and V. Ramasubramanian.
On December 24, 2013, RBI issued a press release warning users about “the potential financial, operational, legal, customer protection and security-related risks” that cryptocurrency users and holders are exposing themselves to.
The court outlined three important aspects:
- In the past 5 years, the RBI had not come across any incident where crypto exchanges’ activities affected the functioning of RBI-regulated entities.
- RBI’s persistent stand of not banning cryptocurrencies in India.
- Internet and Mobile Association of India (IMAI), the party against the ban, suggested that a legal framework to regulate cryptocurrencies, stating ban as an “extreme tool.”
Denying the ban, the RBI said that it has not imposed a ban on cryptocurrency but only “ring-fenced regulated entities from associated risks.”
Ban lift met with positive response
Following the event, Nischal Shetty, founder and CEO of crypto exchange platform WazirX, welcomed the news announcing that INR deposits and withdrawals were “coming soon” to the Indian exchange.
INR deposits and withdrawals coming soon on @WazirXIndia
— Nischal (WazirX) ⚡️ (@NischalShetty) March 4, 2020
Binance’s support towards increasing cryptocurrency adoption and strengthening the blockchain and ecosystem in India grew stronger after its acquisition of WazirX on November 21, 2019. This allowed Binance users to trade crypto using the Indian Rupee.
Extending support to WazirX in increasing crypto adoption in India, Binance tweeted, “We look forward to supporting our partners @wazirxindia and empowering 3 Billion people with the freedom of money.”
— Binance (@binance) March 4, 2020
Binance CEO Changpeng Zhao “CZ” also proudly tweeted about the new development and promoted a new hashtag #IndiaWantsCrypto:
— CZ Binance ???????????? (@cz_binance) March 4, 2020
Hours after the ban was lifted, CoinDCX announced that it had added support for bank account transfers, making it the first cryptocurrency exchange in India to allow cryptocurrency trading with INR.
CoinDCX integrates with a Bank!
CoinDCX becomes the first cryptocurrency exchange in India to integrate Bank Account transfers.
— CoinDCX: Best Crypto Trading Platform (@coindcx) March 4, 2020