India’s supreme court spent all day hearing arguments against the crypto banking ban by the Reserve Bank of India (RBI) on Wednesday.
The counsel for the Internet and Mobile Association of India presented extensive arguments to convince the court that the central bank acted outside its jurisdiction and power in placing a banking restriction on the crypto industry.
Same Case. New Year.
The Supreme Court of India has resumed hearing the crypto vs. RBI case this January. On Tuesday, the court briefly heard the case as scheduled. The counsel for the Internet and Mobile Association of India (IAMAI), Ashim Sood, recapped the arguments he presented last year, starting with the basics of cryptocurrency and blockchain technology.
The IAMAI counsel continued with the Banking Regulation Act, which states that the use of a “public interest” provision can be done only in the context of the Act itself. Local news platform Crypto Kanoon conveyed that the RBI basically cannot just find any problem in the world and use the Act in the name of public interest. Sood supported his argument with several past judgments.
The RBI Act and the Payment and Settlement Systems Act were subsequently discussed. The news platform stressed that the court asked whether cryptocurrency is a payment system. Sood replied that it could be, but the RBI claims that it is not and therefore cannot be regulated.
The Arguement Against Cryptocurrency
Sood presented several arguments that the central bank acted outside of its jurisdiction to issue the April 2017 circular to ban financial institutions from providing services to crypto businesses.
He noted that the central bank mentioned in its circular that cryptocurrencies carry volatility risk, Crypto Kanoon also reported. However, the same can be said about the stock market, which falls under the jurisdiction of the Securities and Exchange Board of India (SEBI).
Sood also referenced statements by the Central Board of Direct Taxes (CBDT) regarding the taxation of crypto assets. He clarified that every regulator is considering crypto in their regulatory perspective: SEBI for securities trading and CBDT for taxation. However, the RBI claiming to act in the interest of consumers is totally outside its jurisdiction.
“You Cannot Hinder What You Cannot Regulate”
The next point Sood made concerns the RBI’s lack of power to prohibit crypto activities. He read out several other rulings to support his argument that the authority who enjoys delegated power cannot prohibit the activities in a total absence of any policy or statutory guidelines. Noting that such prohibition can only be done via an Act of Parliament, he asserted that the RBI cannot devise a form of prohibition as there is no law to support it.
The IAMAI counsel further read out the RBI’s counter affidavit, which shows that the central bank did not conduct an analysis before placing a banking restriction on the crypto industry. Emphasizing that the central bank placed a ban on the industry because it has no power to regulate it, the counsel questioned whether any regulator can ban anything it does not have the power to regulate.