Updated: Supreme Court quashes Reserve Bank of India’s banking ban on cryptocurrency

Platform News: Reserve Bank of India RBI

Interested to learn that the Supreme Court in India has overturned a central bank ban which forbid lenders to facilitate banking transactions for cryptocurrency exchanges and traders, removing a major hurdle for the development of the sector.

Back in April 2018, the Reserve Bank of India gave entities it regulated three months to snap all banking relationships with individuals or businesses dealing in virtual currency.

The Reserve Bank had earlier issued circulars those holding and trading virtual currencies, regarding various risks associated in dealing with cryptocurrencies.

The ban led to plummeting trade volumes and exchanges shutting their businesses.

“Investments had stopped and start-ups were staying away from starting business in the crypto and blockchain space in India which will change now that the Supreme Court has said that the RBI circular was unconstitutional,” said Nischal Shetty, CEO of WazirX, an Indian cryptocurrency exchange.

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However, the industry still faces hurdles as a government panel, appointed to look into the matter, has recommended that India ought to ban all private cryptocurrencies. In July, the panel also recommended a jail term of up to 10 years and heavy fines for anyone dealing in digital currencies.

The government though is yet to act on these recommendations and is yet to finalise regulations around cryptocurrencies.

On several occasions, the government along with the central bank, had cautioned the public about the risks of cryptocurrencies. If the government follows the panel’s recommendations, it could signal the end of the road for these digital currencies in India.

(Via Reuters. Reporting by Suchitra Mohanty in New Delhi and Nupur Anand in Mumbai; Editing by Clarence Fernandez)

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