SC asks RBI to reply to cryptocurrency firms within two weeks

The Supreme Court has directed the Reserve Bank of India (RBI) to respond within two weeks of time to the question which has been asked by the cryptocurrency exchanges over the apex bank order to ban access to banking channels for the transaction of virtual currency in the country.

The exchanges, represented by the Internet and Mobile Association of India, had last year made a representation to the central bank explaining why rules, rather than restrictions, can address the regulator’s concerns over cryptocurrency trade.

Justice Rohinton Fali Nariman on Wednesday directed the banking regulator to respond to the representation in the “manner appropriate” and scheduled its next hearing for September 25, as reported by the Economic Times.

The court also asked the solicitor general to furnish various documents pertaining to the response within a week. Representing the regulator, senior advocate Shyam Divan said that the RBI circular on restricting access to banking channels for virtual currency trade is supplementary to the statutory provisions listed under the Banking Regulation Act.

The counsel said the regulator’s powers can be exercised “whenever there is a threat to the monetary, fiscal and financial policy.” An email sent to RBI did not elicit a response until press time.

Advocate Ashim Sood, the counsel for the IAMAI, presented suggestions by the exchanges to the RBI such as anti-money laundering and know your customer guidelines to address its concerns. The exchanges had submitted that the Money Laundering Act could be made applicable to exchanges deeming themselves as ‘intermediaries’.

Nischal Shetty, CEO of WazirX, a cryptocurrency exchange, said that he had submitted that KYC and AML guidelines be made mandatory in the representation to the RBI. “We had sent responses citing the provisions currently in the system such as the anti-money laundering and know your customer guidelines to address concerns raised, however, we did not receive a reply,” as reported by Economic Times.

RBI issued a notice in July 2018 disallowing banks from servicing cryptocurrency exchanges, delivering a big blow to several startups and subsequently many of them shut shop or scaled-down operations.

 

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