This uncertainty of clashes now may finally come to an end for the Indian cryptocurrency ecosystem. Once the arguments are over, the decision will come out if the cryptocurrency exchanges will get the grant stay of execution to the banking regulator’s crackdown.
Back in April, the RBI authorities had directed distributed lenders to shut down their business dealings with cryptocurrency exchanges within three months.
Since the deadline of July 06, there is the majority of an industry that has already suffered badly. For example, Unocoin cryptocurrency exchange has gone through the average monthly transaction from a peak around 200,000 traders to a drop of 20,000 during months following the crackdown.
However, the cryptocurrency exchanges have also dragged the central bank directly to court as their plea for an interim solace has not been granted.
Apart from the RBI, there are various parties to the case filed by the cryptocurrency exchanges includes,
- Narendra Modi government (The Prime Minister of India)
- Market regulator Securities
- Exchange Board of India (SEBI)
- The enforcement directorate
- Income tax department
According to the official website of the Supreme Court, the hearing held today, on September 11 will be under action in Court 9. The petitioners are as follows:
- Taruna Singh Gohil will represent IAMAI
- Khaitan, Co. (a law company), Anil Katiyar with Swarupama Chaturvedi will represent Kali Digital Systems and the others.
The case numbers are said to be:
- IAMAI: W.P. (C) No. 528/2018 X
- Kali Digital: T.P. (C) No. 961 963/2018 XVI-A resp.
Look Around the Supreme Court Arguments
The rationale of RBI
Back in May, the Supreme Court urges the cryptocurrency exchanges for directly engaging with the central bank as for one month the court were on vacation.
Then in July, at the request of the court, RBI placed an argument mentioning why it was not comfortable with cryptocurrencies.
RBI potentially aims to protect gullible investors from getting exposure to scams or any serious price fluctuations. Since there are major peaky fluctuations taking place respectively with the top leading cryptocurrencies.
The theory of transactions anonymity and storing the tab on the channel funds can also be a risk factor. Together with terror financing and money laundering, these situations can also bring in taxation troubles. The growing cryptocurrency scams globally as always been a case of concern.
According to RBI, the cryptocurrency holds no intrinsic value, as they are none of the backing assets which are another big issue. Instead, RBI is trying to ponder their cryptocurrency to address major issues.
Even the government is said to be uneasy with cryptocurrency and they are also promptly comparing them with Ponzi schemes. They have already set the advisories warning people to investigate into these digital coins.
Meanwhile, in December, RBI has readily formed a panel to research and study about the cryptocurrencies. They are also measuring the plans to find out ways of regulating them. Subhash Chandra Garg is heading the hearing committee who is also the department secretary in economic affairs. There are more participating members from the RBI and SEBI.
The Reactions of Bitcoin Exchanges
The CEO at WazirX, Nischal Shetty says:
The SC hearing is not the end of the road but the beginning of the crypto journey in India…If the outcome is positive then it will definitely boost trading volumes. If the outcome is negative then I don’t think there would be much impact on the existing trading volumes.
The CEO at Instashift, Rahul Chitale mentions that the ruling will be a crucial thing for the regulatory environment. However, it would not show its impact instantly on the market. For Rahul, talking about the long run, this can only benefit India.
The CEO at Coindcx (Indian crypto exchange), Sumit Gupta, explains that the traders and exchanges in India are keeping an eye on the SC ruling. In the coming future, he believes that Indians will achieve innovative channels for investing in cryptocurrencies. Indeed, he also specifies that a negative ruling might shift customers to Peer to peer trading platforms.
Nonetheless, in the past few months, trading volumes have also grown. Nischal Shetty further explains that the WazirX exchange has new trading volume record evaluation because of their applied escrowed P2P system. He adds saying that there is much more money on the sidelines and clients keep on gushing into the market.
However, the trading volume at Unocoin exchange has been declining since the RBI has applied the ban on the crypto market. The CEO at Unocoin, Sathvik Vishwanath states that this cryptocurrency ban is restricting new users and destroying the already existing players on the trading platform.
Wazirx also adds saying that they are all set to face any decision declared by the SC. Regarding this, Nischal Shetty explains:
Crypto has now reached a stage where everyone has started taking it seriously in India and the majority of the young generations see crypto as a way to invest their money. I’m banking on the SC releasing a directive asking the government to lay out regulations for crypto in India as that would enable every Indian to trade safely in crypto in the future.
Additionally, he says that they have no expectation from the trader; investor and retailers sentiment for diminishing with any decision taken by the SC. Mr. Gupta informs that their exchange Coindcx is readily preparing to face the worst. They are all set ready with clear plans for the future.