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Hearing Concluded: Indian Supreme Court Reserves Judgment on Crypto vs RBI Case

28/01/2020 by Idelto Editor

Hearing Concluded: Indian Supreme Court Deliberates on Crypto vs RBI Case

The Indian supreme court has finished hearing the crypto vs. Reserve Bank of India (RBI) case. The hearing concluded on Tuesday with the counsel for the Internet and Mobile Association of India wrapping up his arguments, followed by arguments by the counsel representing crypto exchanges. The judgment has been reserved.

Also read: Regulatory Roundup — New US Crypto Tax Bill, Central Banks Join Forces on Digital Currencies

IAMAI Concludes Arguments in Supreme Court

The supreme court of India resumed hearing the crypto vs. RBI case on Tuesday morning. The counsel for the Internet and Mobile Association of India (IAMAI), Ashim Sood, picked up where he left off last week. He began by saying that there was no study showing that cryptocurrency affects monetary policy, local news platform Crypto Kanoon reported from the courtroom. Sood then brought up some previous cases to discuss the central bank’s power to take preemptive steps, reading out the RBI circular which bans banks from providing services to crypto businesses.

The IAMAI counsel pointed out that the circular has neither stopped crypto trading, or its use as a means of payment, nor cross-border transactions. Therefore, it does not address any of the central bank’s concerns. Sood asserted that the circular “was always intended to control consumer behavior and it seems to been failed even in this purpose,” Crypto Kanoon conveyed.

During the hearing, Justice Ramasubramaniam mentioned that Warren Buffett has made a negative statement regarding bitcoin, to which the counsel replied by showing an article where the Berkshire Hathaway CEO said he may have made a mistake by not investing in technology companies such as Apple and Google. Sood claims that if Buffett can make a mistake, why can’t the RBI? He then concluded his arguments.

Hearing Concluded: Indian Supreme Court Reserves Judgment on Crypto vs RBI Case — Warren Buffett

Crypto Exchanges’ Counsel Concludes His Arguments

After the IAMAI counsel, Nakul Dewan, the counsel representing a number of crypto exchanges, began his arguments. He explained that cryptocurrency “should be seen from the perspective of its legal creation whereby it has characteristics of property but not by its use whereby it is akin to money,” the news portal detailed.

The counsel read out a few statements from other regulators, such as the U.K. Task Force, and submitted that crypto assets have the characteristics of property. He wrapped up his arguments after stating that the central bank’s arbitrary measure has indirectly shut down crypto exchanges’ businesses. The hearing then concluded.

A few hours after the hearing ended, the supreme court issued an order declaring that the judgment is reserved and the written submissions may be filed by Jan. 31. Furthermore, the court is set to hear the petitions relating to the country’s crypto policies after it has pronounced judgment on the RBI case.

Editor’s Note: This article has been updated with the court order.

How do you think the court will rule? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock and Yahoo Finance.

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Panic Withdrawals at Indian Bank Over Alarming KYC Notice

24/01/2020 by Idelto Editor

Hundreds of customers went on a withdrawal spree after an Indian bank announced its revised KYC requirements. The bank’s action followed the decision by the Reserve Bank of India (RBI) to include the National Population Register letter as a valid KYC document for opening bank accounts. Customers are worried their funds could be frozen.

Also read: Regulatory Roundup — New US Crypto Tax Bill, Central Banks Join Forces on Digital Currencies

Customers on Withdrawal Spree

Customers of the Central Bank of India’s Kayalpattinam branch in the state of Tamil Nadu have been on a “panic withdrawal” spree after the bank issued a notice in a local newspaper regarding its revised know-your-customer (KYC) requirements, local media reported on Jan. 23. The Central Bank of India, a government-owned bank, is one of the oldest and largest commercial banks in India.

The notice, posted on Jan. 11, states that a letter from the National Population Register (NPR) will be made a valid document as part of the bank’s KYC process. Panic ensued as many people oppose the contentious Citizenship Amendment Act (CAA), the National Register of Citizens (NRC), as well as the NPR. Many customers reportedly said they are scared that their money could be blocked.

An officer of the bank told NDTV on Wednesday that “Normally we would have a withdrawal of around 25 lakh [2.5 million] every day,” adding:

Now this has shot up by six times. People are just leaving minimum balance in their accounts.

The Indian Express reported on Thursday that soon after the notice, “Hundreds of customers in Kayalpattinam village, many of them belonging to the Muslim community, reached the bank branch to withdraw their money.” A bank official said similar reports are coming from branches in many places.

According to the Siasat publication, the documents mentioned in the bank’s notice were the PAN card, passport, voter identity card, driving license, National Rural Employment Guarantee Act card, Aadhaar and NPR letter. The notice further states that the accounts of the persons who failed to submit documents would be frozen, but does not mention whether the customers have to submit all the documents or any one of them.

Optional but Customers Won’t Listen

Following mass withdrawals, the bank sent out another notice on Jan. 19 to clarify that the NPR letter is optional and customers can choose to submit it or other KYC documents. The bank further claims that its earlier announcement was a mistake. However, local media reported that confusion prevailed and customers continued their “cash withdrawal spree.”

“We approached community leaders and Jamaat committees of Kayalpattinam to convince our customers as a large amount was withdrawn in less than three days,” an official of the bank told the Indian Express. “We do not even know if we could convince all customers and get them back to our branch.” Noting that most of the branch’s customers are Muslim and many of them have withdrawn almost their entire savings, he said:

Customers were not listening to our words. The panic was so much that even community elders had to struggle to convince them.

A government employee and customer of the bank told the news outlet that nearly all customers of the branch had panicked. She was quoted by the publication as saying:

Since we had the experience of demonetisation that forced us to stand in the queue for so many days, every customer who was panicked reached the bank. Bank officials were helpless as they couldn’t convince us why RBI included NPR in the list before it is even updated in most states.

According to local media, some customers withdrew due to the KYC notice confusion while others did it as a mark of protest against the NRC and the NPR.

RBI’s Decision to Include NPR Letter for KYC

The bank’s notice followed the decision by the RBI to include the NPR letter as a valid KYC document. According to the “Master Direction” for KYC posted on the RBI website, updated on Jan. 9, “‘Officially Valid Document’ (OVD) means the passport, the driving license, proof of possession of Aadhaar number, the Voter’s Identity Card issued by the Election Commission of India, job card issued by NREGA duly signed by an officer of the state government and letter issued by the National Population Register containing details of name and address.”

The NPR is a register of “usual residents” of the country, which is defined as a person who has resided in a local area for the past six months or more or a person who intends to reside in that area for the next six months or more, explained India’s Office of the Registrar General & Census Commissioner. The NPR data was first collected in 2010 and it is to be done every 10 years. It is mandatory for every usual resident of India to register in the NPR.

Some Muslim groups and parties like the Manithaneya Makkal Katchi (MMK) are up in arms over the new requirements, NDTV reported. “Many fear it is a move to normalize the submission of the NPR letter … Many protested outside the RBI blaming it for the confusion and have called for a boycott of the Central Bank of India for hasty implementation amid public protest.”

Ahmed Shah, a lawyer who opposes the NPR, transferred his savings to a private bank. He told NDTV that he would close all accounts at the bank if this rule is implemented. He was quoted as saying, “We are not even accepting NPR and why should we even show it?” MMK founder Professor Jawahirullah led the NPR protests on Wednesday. He was quoted as saying:

What we demand is RBI should withdraw this circular demanding NPR as one of the components of KYC as we fear in the next step NPR will be the only one document which they may need.

What do you think about providing the NPR letter for KYC to open a bank account? Let us know in the comments section below.

Images courtesy of Shutterstock, Outlook India, and Biplov Bhuyan/Hindustan Times via Getty Images.

The post Panic Withdrawals at Indian Bank Over Alarming KYC Notice appeared first on Bitcoin News.

Indian Supreme Court Warms Up to Crypto as RBI Defends Its Ban Power

23/01/2020 by Idelto Editor

Indian Supreme Court Warms Up to Crypto - RBI's Arguments Not Convincing

India’s supreme court heard the crypto case on Thursday, starting with the arguments by the counsel for the Reserve Bank of India (RBI). After pointing out that the RBI ban only hurts crypto businesses but does not stop crypto trading, the court explained that “being an honest contributor to the blockchain is more profitable than trying to tamper with the chain.”

Also read: Crypto vs RBI — 3 Days of Intense Supreme Court Hearings

RBI in Hot Seat, Ban Can’t Stop Crypto

The Indian supreme court resumed hearing the crypto vs. RBI case Thursday morning. Local news platform Crypto Kanoon reported from the courtroom that Shyam Divan, counsel for the central bank, picked up his arguments from the previous day. The counsel began by reading out the RBI’s reply to crypto exchanges’ representation and briefly explained about peer-to-peer exchanges operating in India and how crypto exchanges allow their users to transfer funds abroad. He claims that this exposes them to the risks associated with FEMA (Foreign Exchange Management Act), AML (anti-money laundering) and CFT (combating the financing of terrorism).

The judge pointed out that the RBI circular only stopped banks from providing services to crypto exchanges but is unable to stop crypto trading. The counsel replied that it is up to the banks to identify crypto transactions and stop them. The judge quickly interrupted him, asking: “how would the bank know without conducting an investigation and knowing the source of transactions.” The counsel admitted that the measure is not so effective but insisted that it discourages crypto transactions. Crypto Kanoon described:

Justice Nariman points a finger towards the exchanges’ counsel and says by this their business has come to end and the constituent i.e. trading of crypto is still active.

RBI Circular Did Not Cause Crypto Price Drops

While admitting that crypto trading is still active, the counsel made the claim that volumes have decreased. He then read from his brief about a sharp decline in crypto prices after the RBI circular was issued, which banned banks from providing services to crypto exchanges. The judge quickly interrupted him again, clarifying:

If you see in 2017 the graph was going up and from 2018 it is globally declining. It is not because of your circular that prices are coming down.

Indian Supreme Court Warms Up to Crypto, Unconvinced by RBI Arguments — BTC price chart on Bitcoin.com

The counsel conceded, admitting that “there may be various other factors and it may or may not be because of RBI circular,” Crypto Kanoon conveyed. After discussing among themselves, one of the judges elaborated:

Being an honest contributor to the blockchain is more profitable than trying to tamper [with] the chain.

The RBI counsel persevered, citing several other cases’ judgments to support his arguments. He even referred to the judgments which state that the scope of the court’s intervention is “limited when an expert committee like RBI has acted under its statutory power as it is an expert body for a particular domain.”

After the lunch break, the RBI counsel continued his arguments, referring to more past judgments. They discussed the RBI’s power to regulate, which includes the power to prohibit. In concluding his arguments, the counsel insisted that the central bank has a statutory power to take the action it did. The RBI also said it has been cautioning crypto trading since 2013 and has kept a keen eye on the industry.

IAMAI Responds to RBI’s Issues

Next, the counsel for the Internet and Mobile Association of India (IAMAI), Ashim Sood, took the center stage and made his rejoinder submissions. He began by referring to the Central Goods and Services Tax Act, claiming that the law does not prohibit using cryptocurrency as a medium of exchange. Nonetheless, he added that no one uses it for that purpose due to its volatility and explained crypto’s investment potential.

The IAMAI counsel proceeded to discuss blockchain technology, using Ethereum as an example. He asserted that cryptocurrency is needed to maintain the efficiency of blockchains. Crypto Kanoon quoted him as saying:

We don’t say that it is not possible to separate crypto from blockchain. But there is a valid and legitimate reason for both to go together. Crypto makes blockchain viable for certain uses.

Sood then argued against the RBI having the authority to ban crypto, referencing a few past cases. “When RBI knows that there are legitimate uses of crypto. Then RBI should make a determination of those uses and not turn a blind eye by just citing illegitimate uses,” he said.

Further, the IAMAI counsel emphasized that there is not a single finding that crypto is impacting the payment system in any manner, noting that it was not even mentioned in the report by the interministerial committee which drafted the draft bill to ban cryptocurrencies, except state-issued ones. Sood added that there is no merit in the claim that law enforcement agencies are unable to stop crimes involving cryptocurrencies.

He proceeded to dissect the documents the RBI relied on one by one, showing the court that they are not sufficient for the central bank to take such measures. Sood also discredited the RBI’s terrorism financing argument, stating that it is part of the central bank’s kitchen-sink approach to stop crypto activities indirectly since it has no direct control over the sector.

Sood then read out a few past judgments from other cases, mentioning that the RBI annual report states that the risk from cryptocurrency is negligible. He further noted that the RBI’s reply to a Right to Information (RTI) request revealed that the central bank formed no committee to study the issue prior to issuing the April circular. While the RBI claims to take action in the interest of consumers, the IAMAI counsel read out the interdisciplinary committee’s recommendations which do not mention market integrity, financial stability, payment system, credit system, or monetary policy. Sood will continue his arguments on Tuesday. Crypto Kanoon commented from the courtroom:

It is a wonderful experience to witness a supreme court judge explaining facts about blockchain and advocating its immutability. It is more exciting to see a judge upholding Satoshi’s view.

What do you think of the supreme court hearing today? Do you think the RBI ban will be lifted next week? Let us know in the comments section below.

Images courtesy of Shutterstock and Bitcoin.com.

The post Indian Supreme Court Warms Up to Crypto as RBI Defends Its Ban Power appeared first on Bitcoin News.

Indian Supreme Court Resumes Hearing Crypto Case in Detail

15/01/2020 by Idelto Editor

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.

Also read: Regulatory Roundup: EU-Wide Crypto Regulations, New Rules in Europe, US, Asia

Supreme Court Resumes Hearing Crypto Case

The Supreme Court of India resumed hearing the crypto vs. RBI case this week. 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 hearing resumed all day on Wednesday. In addition to providing a recap of the arguments previously made, local news outlet Coin Crunch India reported that Sood began by reading out the guidelines issued by the Financial Action Task Force (FATF). After explaining how other countries handle cryptocurrencies and how crypto exchanges operate, he emphasized that the banking channel is needed to run an exchange. The court also asked how bitcoins are mined.

Sood proceeded to read out the latest RBI response to the IAMAI representation submitted by the central bank in September last year. As directed by the court, the central bank responded to every point made by the IAMAI.

Banking Regulation, RBI, Payment and Settlement Systems Acts

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 judges then asked the counsel whether the shifting of people from the conventional financial system to the crypto system impacts the country’s monetary system, which the RBI has to protect. Sood cited an RBI circular which states that crypto activities do not currently impact India’s monetary system and would not in the near future. He also read out an August 2018 RBI report stating that crypto does not pose any threat to the monetary system of the country.

IAMAI Argues RBI’s Ban Outside Its Jurisdiction

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.

Sood supported his argument by referencing other cases, the news platform detailed. The counsel noted that while the RBI admitted that it has no power over commodities, it still exercised power to stop commodities from being traded.

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. Crypto Kanoon noted that in another case, “when legislature doesn’t find a reason to stop/prohibit any economic activity, then the authority doesn’t have [the] power to devise a new form to prohibit such economic activity. Such prohibition violates my right to freedom of trade.”

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.

The hearing is expected to resume on Thursday.

What do you think of the supreme court hearing of the crypto case today? Do you think the court will soon lift the RBI ban? Let us know in the comments section below.

Images courtesy of Shutterstock.

The post Indian Supreme Court Resumes Hearing Crypto Case in Detail appeared first on Bitcoin News.

Indian Supreme Court Takes Too Long on Crypto Case – Exchange Shuts Down

31/03/2019 by Idelto Editor

Indian Supreme Court Taking Too Long on Crypto Case - Coindelta Terminates Service

The inaction of India’s supreme court to end the prolonged banking restriction has forced another cryptocurrency exchange to shut down. The exchange has given its users 30 days to withdraw funds at increased fees, prompting several other exchanges to offer to refund these fees for customers switching to them.

Also read: Indian Supreme Court Set to Hear Crypto Case on March 29

Coindelta Shuts Down

Indian crypto exchange Coindelta announced its service termination on Saturday. The exchange wrote, “we will no longer be able to provide exchange services for cryptocurrencies,” elaborating:

The curb on the bank accounts by RBI has made us handicapped in order to provide seamless deposit and withdrawal services. There has not been any significant progress in the supreme court case which makes it difficult to predict when we will see the regulation.

The central bank, the Reserve Bank of India (RBI), issued a circular in April last year banning banks from providing services to crypto businesses including exchanges. The ban went into effect in July and banks closed the accounts of crypto exchanges at that time.

The banking restriction has put many crypto businesses in limbo. Zebpay, formerly one of the largest crypto exchanges in India, was forced to close down its exchange operations in the country in September last year.

A number of industry participants have filed writ petitions against the ban which the supreme court originally scheduled to hear in September last year. However, the case has repeatedly been postponed. During the most recent hearing which took place on Friday, the court adjourned without addressing the ban until at least July.

Expensive to Run an Exchange

The team at Coindelta, an 18-month-old exchange, explained that “Running the exchange is very expensive in such [an] unfavourable environment.” Noting that “We have been operating at a minimal trade fee, bearing all the costs ourselves ensuring that your trading experience remains unaffected in the current unregulated environment,” the team admitted:

It has been really difficult for us to operate Coindelta exchange for the last 6 months … Economically, it’s no longer viable to continue with the exchange.

According to Saturday’s announcement, Coindelta’s exchange services were suspended and all open orders canceled in all markets at 2:00 p.m. (Indian time) on March 30. However, the wallet services will continue until April 29.

Customers Forced to Withdraw Funds at High Fees

Coindelta has requested that its customers withdraw all their funds within 30 days of the suspension, after which all requests must be submitted to support. “There will be a fixed fee applicable on all the withdrawals,” the exchange warned.

According to the Indian crypto community, these fees are high compared to what other exchanges are charging. For example, “they increased the XRP withdrawal fees to 10 XRP,” Coindcx CEO Sumit Gupta told news.Bitcoin.com, emphasizing that this fee is “a lot” since his exchange charges 0.01 XRP for withdrawals. Coindelta’s BTC withdrawal fee is 0.002 BTC, worth about $8.19 at the time of writing.

Nischal Shetty, CEO of crypto exchange Wazirx, tweeted that he “Got many messages that withdrawal fees from Coindelta have been increased,” adding that his exchange is offering Coindelta’s users 100 percent refund of withdrawal fees if they switch to Wazirx.

Another Indian exchange, Bitbns, has made a similar offer. “We are waiving off/refunding any fee incurred while depositing funds to Bitbns from any other cryptocurrency exchange across the world. This means you can now transfer your funds from any crypto exchange to Bitbns without bearing any transfer charges,” the exchange announced on Sunday.

What do you think of the Indian supreme court taking so long to end the RBI ban that Coindelta has to shut down? Let us know in the comments section below.

Images courtesy of Shutterstock.

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