INSUBCONTINENT EXCLUSIVE:
MUMBAI: The Reserve Bank of India has said it had not banned cryptocurrencies such as Bitcoin in India, but only ringfenced regulated
entities like banks from risks associated with trading of such virtual instruments.
The central bank said this in a response to a petition
filed by the Internet and Mobile Association of India (IAMAI), which wanted it to reconsider a 2018 circular directing regulated entities
not to deal in cryptocurrencies.
The IAMAI, whose members include cryptocurrency exchanges, had approached the Supreme Court against the RBI
In a hearing earlier this month, the association argued that trading in cryptocurrencies, in the absence of a law banning those, was a
legitimate business activity but the RBI had effectively banned it by blocking access to banking channels
The next hearing in the case is scheduled for Tuesday.
ET has seen a copy of a 30-page affidavit that the RBI had filed in the SC on
has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along
swiftly and stringently dealt with
said in its affidavit, in response to IAMAI's objections.
The RBI and IAMAI did not respond to ET's queries on the matter until press
time Monday.
The RBI's response also revealed that during discussions with the government on whether to ban or regulate cryptocurrencies
earlier in 2018, the RBI had said initial coin offerings be prohibited, and virtual currency asset funds not be allowed to be set up and/or
operated within the legal jurisdiction of India
The central bank also suggested that the Foreign Exchange Management Act and its regulations be enhanced to prevent and track remittances
for investment in virtual currencies made under the Liberalised Remittance Scheme
with examples of virtual currencies being used to fund terror in the past.
