The Reserve Bank of India (RBI) says that digital currencies such as cryptos are not banned in India. That is despite the rumors surrounding the said digital asset. Banking support on their trading, however, is still very much illegal.
The Economic Times reported just this Tuesday, relaying the clarification made by the central bank to the Indian Supreme Court.
The 30-page long affidavit contained the RBI’s ruling over cryptocurrencies. It stated that the country doesn’t prohibit virtual currencies. However, it has directed its regulated entities to avoid providing services to those entities dealing and settling with VCs.
Additionally, RBI has successfully ringfenced their regulated entities from engaging in any activities that could result in financial or reputation risks, as well as repercussions that involve operational and legal risks.
The reason behind this law enforcement, as explained by the RBI, is the increasing risks of money laundering and terror financing. Thus, the need for the restrictions on the bank services in this specific industry. The volatile nature of crypto prices was something the central bank couldn’t dismiss as well.
To counter this, the Indian apex court is already in the process of hearing petitions of multiple digital assets exchange against the RBI’s ruling on virtual currencies.
Ongoing Hearing on the Crypto Ban
According to Finance Magnates, the opposition was able to make some strong arguments in favor of crypto currencies. They’ve questioned the jurisdiction of the RBI in regulating and banning digital assets in the country when they don’t recognize it as currency in the first place.
In 2018, the Finance Minister of the country also announced crypto as illegal tender. The court has not heard of the central bank’s stance regarding the justification of its restrictions with crypto entities.
Also Read: Crypto Tax Around The World Pt.