KOLKATA: If you are an investor in cryptocurrencies, you may soon have problems in quitting positions after July 5. The Supreme Court on Tuesday refused to grant a stay on the restriction imposed by the Reserve Bank of India (RBI) on banks extending services to cryptocurrency-related firms.
A bench headed, by Chief Justice Dipak Misra, said the central bank’s directive prohibiting banks, financial institutions, and other regulated entities from offering services related to virtual currencies such as cryptocurrencies will remain implemented. In a circular dated April 6, the regulator gave banks three months to exit operations. The deadline for this is three days from now— July 6.
In the meantime, players such as WazirX and Koinex have resorted to peer-to peer trading, while players such as BTCXIndia and Ethexindia halted their trading in March as uncertainty looms over future of digital currencies.
“This is just a temporary setback as the SC has moved this petition to the 20th July this completely clubbing all the petitions against RBI ban. That said, the SC directed the RBI to respond to the representation submitted by IAMAI within the next 7 days,” said Nischal Shetty, Founder and CEO, WazirX.
According to Shetty, whether someone is a long-term or a short-term investor, they don’t need to worry as the P2P system will ensure there is always a way to convert crypto to INR anytime the investor wants to cash out.
Echoing on similar sentiment, Ashish Singhal, CEO and co-founder CoinSwitch.co, said that in India, the industry is still evolving and nobody can accurately price the risk right away.
“While the RBI is trying to cut off an avenue for crimes using virtual currencies, countries such as Malta, Thailand and the US are are creating rules to allow more secure crypto trading.
The Finance Ministry has yet to make a final ruling on a formal ban as the matter is now listed for July 20.
Cryptocurrencies are digital currencies, in which encryption techniques are used to regulate the generation of the currency units and verify the transfer of funds, operating independently of a central bank.
The top court was hearing a plea filed by Internet and Mobile Association of India seeking a stay on the RBI circular claiming it was "arbitrary, unfair and unconstitutional".
The association has contended that the RBI circular has barred all the entities regulated by the apex bank from providing services to any individual or business dealing in virtual currencies like cryptocurrencies.
(With inputs from PTI)