Cryptocurrency's Ban Lifted: The Road Ahead
Created on 06 Mar 2020
Wraps up in 3 Min
Read by 2k people
Updated on 10 Sep 2022
It’s ‘Crypto’ in the House! Supreme Court has lifted the ban on cryptocurrency trading. What does this mean exactly? Read and find out below
There are numerous instances in Cricket when the umpire gives a decision but the third umpire overturns it. This usually happens in 2 cases. First, if the umpire is not sure of his decision and refers to the third umpire. Second, if the player thinks that the umpire’s decision is incorrect and takes a review.
Now, in the second case, imagine a tense situation where a batsman was given out on the last ball of the game but he went for the review. Now, after referring to the entire scenario, third umpire declared him ‘Not Out.’ That might be the game-changing moment.
Now, imagine the umpire as RBI and third umpire as the Supreme Court of India. It’s the third umpire’s decision that finally counts even if the umpire doesn’t agree. Supreme Court’s decision to lift RBI’s ban on Cryptocurrency is almost like the scenario mentioned above.
Virtual Ban on Virtual Currency
The Reserve Bank of India (RBI) had issued a circular on April 6, 2018 in which it ‘virtually’ banned cryptocurrency trading by directing all the entities regulated by it to not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling those. Let’s not try and understand this technically. In simple words, this was a ‘virtual ban.’
By the way, this circular was later challenged in the Supreme Court and the result is what we are seeing now. Now that the apex court has said that cryptocurrency trading is legal, RBI is still maintaining its stance that trading in virtual currencies has its own set of risks and that it might undermine the integrity of the banking system. But, as a matter of fact it doesn’t matter now because the decision can not be challenged or reversed now.
Supreme Court’s Say
The entities who in favor of the cryptocurrency had argued in the court that this is a legal business practice as per the constitution and hence can not be banned. The Supreme Court in its decision cited ‘Grounds of Proportionality’ to set aside the RBI circular that banned cryptocurrency trading. To explain this in simple words, the Supreme Court has stated that a measure has to rationally connect to the ends, which the RBI circular failed to do.
Besides this, Supreme Court has also stated in its judgement that RBI till date has been unable to prove that any of its regulated entities namely banks and NBFCs has suffered a loss (either directly or indirectly) on the account of interface that the virtual currencies exchanges had with any of them. These aforementioned points have made this a landmark judgement.
The Road Ahead
It has been seen many times that teams lose crucial matches not due to poor performance but faulty umpiring (Remember the England vs New Zealand World Cup final?). There were many cryptocurrency startups that took off but had to shut down due to the RBI circular issued in 2018. They might come back to life. Also, the cryptocurrency trading may affect the market (positively or negatively, we’ll have to see).
But, does this mean that the cryptocurrency trading is all fair and square and that there’s nothing fishy in it? Not quite. You see, whenever a network or database gets hacked, the hacker always asks for the ransom in Bitcoin!
If stringent cyber laws could be created to prevent fraudulent activities and curb wrong usage of the cryptocurrency, only then it makes sense to go ahead with this freedom of trading. Otherwise, people might lose money and then they’ll plead before RBI to impose a ban on it again.
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