In what is widely being considered a historic day for the crypto industry as a whole, the Supreme Court of India has passed a judgment nullifying the controversial banking ban imposed by the Reserve Bank of India on the country’s local digital currency market.
The three-judge bench presiding over the matter — justices Rohinton Nariman, S. Ravindra Bhat and V. Ramasubramanian — stated in their joint verdict that the ban, which was issued as a precautionary measure by the RBI in order to “protect” the nation’s economy, had not been substantiated by any hard facts.
It is worth recalling that back in April 2018, the RBI — India’s central banking authority — had issued a circular asking the nation’s various banks and other financial intermediaries to stop their monetary dealings with any crypto-related businesses. This imposition was regarded by many experts as unconstitutional but also beyond the general purview of the RBI. As a result, a number of prominent members from India’s crypto ecosystem came together to stand up against the unjust ban.
A case was brought forth before the supreme court by both the Internet and Mobile Association of India — a nonprofit organization seeking to expand and enhance India’s online and mobile value-added services sectors — and Ashim Sood, chief counsel for the association, who served as the Indian crypto community’s legal representative.
Sood is being widely praised for his efforts, especially for putting forth many pro-crypto arguments in front of the judge’s panel — a task that many experts believe could have only been carried out meticulously, since the information on digital assets is quite skewed among the Indian masses.
In an exclusive conversation with Cointelegraph, Sood stated that the recent judgment is not only fair and just but will most likely serve as the core basis for many future decisions regarding this emerging tech space, adding:
“The Supreme Court’s verdict is a call for responsible and balanced regulation — it encourages a fact-based empirical approach to cryptocurrency regulation. In the coming years, this judgment could serve as a beacon for decisions concerning emerging technologies and their effects.”
Loretta Joseph, a government affairs consultant at Medici Ventures, told Cointegraph on the sidelines of the London Blockchain Week that she welcomes the move to lift the ban, as it will help to establish a better regulatory environment:
“I think this opens up blockchain innovation. Entrepreneurship gives India the best opportunity now, because I think when you ban things, it's not good, as regulation is very important. We need regulation and this industry needs regulation. But banning, it doesn't help innovation and entrepreneurs start to do things that they can do without any recourse of the law.”
Lastly, just a day after the supreme court passed its judgement, Unocoin — one of India’s leading cryptocurrency exchange platforms — announced via Twitter that it had enabled bank account deposits and withdrawals in Indian rupees, thereby making crypto purchases available. It is expected that more exchanges will soon follow suit.
What impact will this latest verdict have?
Following the reversal of the ban, many had expected the price of Bitcoin and other premier digital currencies to surge. However, no significant market shift has been observed as of yet. Providing his insights on the matter, Sumit Gupta, CEO of cryptocurrency exchange CoinDCX, told Cointelegraph that India’s crypto environment is set to undergo a massive transformation, since the nation’s existing peer-to-peer exchanges will now have the option of teaming up with legitimate banking partners, adding:
“We expect trading volumes to surge because, from our side, we are going to do our best to remove any doubts that people may have regarding cryptos. Also, global exchanges have been seeing huge potential in India over the past year or so. That is why they partnered with us even when the ban was in place.”
This sentiment was strongly echoed by Sidharth Sogani, CEO of Crebaco, an India-based analytics firm, who told Cointelegraph that owing to the simple fact that more than 50% of India’s current population is under the age of 35, it would not be surprising to see the adoption of crypto-enabled technologies increase dramatically in the coming few weeks.
India’s economy all set to blossom?
Prior to the Reserve Bank of India’s nationwide banking ban, the country’s crypto economy was worth a whopping $12.9 billion. However, with the industry at large having grown leaps and bounds over the past couple of years, Gupta believes that this figure has most likely increased quite substantially. On the subject, he added:
“I think the Supreme Court has opened a much larger space for us which is only going to prosper from this point. We have always seen cryptos and crypto-based products as fuel to India’s current economic growth. You will see an ecosystem developing in this country that is going to flourish from all ends.”
It is also worth noting that the Indian Supreme Court is currently hearing another case that will most likely decide the nature of the regulations to surround the country’s digital currency market. In this regard, the judgment on reversing the RBI’s crypto trading ban weakens the case for stricter norms and so, it would not be surprising to see significant growth in Indian investor activity across the sector.
Expounding his views on the matter, Jamal Hassim, the founder and CEO of the BOLT.Global blockchain platform, told Cointelegraph that the crypto ban effectively stifled all innovation in the Indian crypto industry:
“A lot of start-up companies working in the space had ceased operations as did trading portals. More than the loss in trading, India lost the opportunity for critical innovation in the space, which is the key driver for utility, adoption and effective prices. We can expect an influx in both local and international companies trying to capitalise the new market. I wouldn’t be surprised if Facebook’s Libra project tries to re-start from India, considering the current opposition within the U.S.”
Lastly, Hassim believes that the re-entry of Indian traders will most likely bring in more volume as well as an increase in the market cap of premier crypto assets like Bitcoin or Ethereum. Furthermore, Binance CEO and Founder Changpeng Zhao told Cointelegraph that the local community will now likely see a greater exposure to crypto:
“This has been a landmark judgement giving the people of India a chance to realize their crypto dreams. [...] Binance has already shown its commitment to the Indian people via WazirX, and we are looking to increase our exposure in the Indian cryptocurrency and blockchain scene to grow it even further.”
India’s finance ecosystem is primed for advancing crypto innovation and adoption
Prior to the blanket ban, India was seen as one of the largest crypto markets in the world — with exchanges like BitBNS and WazirX driving massive daily trade volumes. Now, with the passing of the supreme court’s latest judgment, a number of investors who had been seeking alternative avenues to traditional stocks and bond options will have the ability to add crypto assets to their portfolios.
Speaking on the monetary potential that the Indian crypto ecosystem currently possesses, Gaurav Dahake, CEO of the BitBNS crypto trading platform, told Cointelegraph:
“India is the hub for blockchain innovation and has the 2nd highest number of blockchain developers in the world. This judgment has opened up the market tremendously. There are investors that have already pinged us who would want to invest.”
Additionally, some in India previously thought that when the banking ban was imposed by the RBI, buying and selling of cryptocurrencies had become illegal. However, the central bank’s circular had only instructed banking institutions to refrain from facilitating any deals involving digital currencies.
Now, with the supreme court siding with the Indian crypto community, a lot of potential investors will be given the opportunity to buy crypto using traditional banking avenues — thereby providing the local industry with a new air of legitimacy.
Providing his views on the subject, Jagdish Pandya, chairman of BlockOn, a blockchain venture builder and venture capital firm, told Cointelegraph that in the coming few months, the Indian market will witness more and more people making use of crypto to encash, exchange and redeem their digital holdings:
“I foresee big product adoption and multi-channel integration via wallets like Paytm, Rapidz as well as many loyalty programs. Prices will grow upon adoption in Q3 and Q4.”
What lies ahead?
With the supreme court providing a lot of clarity in regards to the financial status of crypto within India, it is now quite clear that the banking ban was a bad decision on the RBI’s behalf, especially because a number of crypto and blockchain startups were forced to migrate to countries like Singapore, Thailand, and Malaysia following the ban — thereby adversely affecting the nation’s economy. WazirX CEO and Founder Nischal Shetty told Cointelegraph:
“This positive judgement will open doors to massive crypto adoption in India. It proves that we can now innovate, and the entire country can participate in the blockchain revolution.”
Also, the Indian government has taken a little more than two years to lift a ban that was widely perceived to be unconstitutional to begin with. Thus, it will be interesting to see how much time it now takes to create a regulatory framework to govern the local crypto market.
Last but not least, the supreme court’s verdict may see a number of scammers and miscreants make their way into the Indian crypto sector in order to take advantage of unsuspecting investors. As a result, a whole host of crypto pundits are eagerly waiting for regulations to be established, otherwise, if people lose their funds to scammy initial coin offerings, fingers will once again be pointed at Bitcoin (BTC).
The interview with Loretta Joseph was conducted by Joseph Birch.