Reserve Bank of India Admits Virtual Crypto Ban was Without Prior Research
Cryptocurrency issue has been trending in India especially after the release of 2018 Budget which indirectly indicated that cryptocurrency is not a valid legal tender and is illegal in India.
Now the debate has heated up after Varun Sethi, a Delhi-based startup consultant, released the response he got from RBI post his RTI application. He filed an RTI application on 9th April 2018. The RTI was filed post the notice issued by RBI.
On April 6 this year, RBI had issued a notice titled ‘Prohibition on dealing in Virtual currencies’. The notice directed the e-wallets, banks and payment gateway providers to withdraw support for the cryptocurrency exchanges in India and other businesses dealing with such virtual currencies in India.
In response to the RTI filed by Varun Sethi, the Central Bank declared that there was no research undertaken and no internal committee was formed to look into the domain of virtual currencies. However, it is known that RBI is a part of two different committees constituted by the Ministry of Finance in order to study virtual currencies in India.
The Reserve Bank of India responded to all the questions related to the formation of a committee for virtual currencies by saying a simple “No”. The committee to be formed within the regulation was for the purpose of understanding the working of virtual currencies.
The Reserve Bank specifically mentioned that there was no consultation and no research undertaken before the implementation of the notice and restriction in April. The RBI also admits that there was no committee formed to analyze the concept of the blockchain, working of virtual currencies and trading in such currencies. The answers were revealed in the RTI as RBI’s reply.
It seems that the ban was arbitrary and that RBI gave conflicting answers to the questions asked. However, RBI does not accept that its representatives were a part of the Finance Ministry led committees which were formed to regulate cryptocurrencies. Since April, various crypto exchanges have been upset with RBI and have approached India’s top court and are awaiting clarity on the crypto issue.
There are almost three million virtual currency users in India hence the issue needs strong attention. The RTI reply might be presented as evidence in court. Mr. Sethi plans to file another RTI to get clear answers.
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