RBI and the Indian Crypto Industry
11 Pages Posted: 19 Nov 2020 Last revised: 24 Nov 2020
Date Written: September 25, 2020
RBI, the Central Bank of India has been in a cold war with the Indian crypto industry. Being concerned with India’s ability to absorb financial shocks, RBI has time and again tried to unfurl the disadvantages of using cryptocurrencies. The same concern was shared by other Indian regulators’ and governmental agencies. The industry has felt that the RBI is reacting in a hyperbolic fashion. When eventually RBI banned the access of crypto industry to the banking channel in India, the case eventually got to the Supreme Court of India which not only dealt with the issue, but also with certain paramount questions with regards to the RBI’s regulating powers. This article deals with journey of RBI with the Indian crypto industry including the case of IMAI & Ors. vs RBI where Supreme Court eventually lifted the ban imposed by RBI. The Achilees’ heel in RBI’s approach is the delusion towards the fact that it is possible to ban cryptocurrencies whereas looking at all the other nations’, it is much better to regulate it and mitigate the risks. A bill regarding banning cryptocurrencies is still in parliament which if approved, will suffice the RBI’s objective.
Keywords: RBI, central bank, India, cryptocurrency, cryptoexchange, Indian crypto, cryptocurrency India, RBI cryptocurrency
JEL Classification: K00, K1, K10, K19, K22, K23, K2, K49
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