The Indian Supreme Court has decided to postpone the sentence in the case involving the country's central bank, sued by the Internet and Mobile Association of India (IAMAI) on the charge of having exceeded its powers by preventing normal banking operations to the subjects involved, in various capacities, with cryptocurrencies; pending the ruling of the Indian Supreme Court, the local newspaper Economic Times published an article today which, taking up the sworn statement made by the central bank to the Supreme Court on 4 September, aims to clarify what the position of the institutions is Indian in this whole thing.
The RBI (Reserve Bank of India) therefore said that it is not cryptocurrencies per se that are banned in the country, but bank support for trading on this asset class.
More specifically, as can be read from the RBI's sworn statement, the institution stated that:
The RBI has never prohibited the use of virtual currencies in the country, it has only limited itself to ordering entities regulated by it not to provide services to those people or entities that trade or regulate cryptocurrencies in order to prevent them from being involved in activities involving reputational and financial risks, as well as both legal and operational risks.
This statement, however, I believe goes to legitimize the accusations made by IAMAI to the RBI, in other words, the central bank, releasing this testimony has basically shot itself on the feet; affirming such a principle means opening the door to something that resembles preventive justice.
It is not for the central bank to define what types of legal, financial or operational risk a bank can or cannot undergo; to give a trivial example, it is as if the central bank of a country forbade banks from opening a current account to plumbers because these are one of the categories that statistics indicate as among the most likely to evade taxes.
Clearly this would be intolerable, yet this is precisely what the BIS has argued; in practice, since numerous international reports point the finger at cryptocurrencies considering them useful tools for laundering money, the BIS has seen fit to indiscriminately hit all those who operate with cryptocurrencies, in a completely preventive way.
However, the Indian Supreme Court will have to rule on this whole story, however many Indian observers say that the sentence will probably accept the IAMAI point of view stating that the BIS has crossed the boundaries of the powers that the constitution recognizes by asking the banks to adopt a discriminatory approach towards a part of citizens; in any case, we just have to wait and see how things will evolve, despite the fact that the Supreme Court has decided to give itself more time to decide on the case, the sentence should not be long in coming.
