Regulatory Series on Cryptocurrencies: Spotlight on Supreme Court of India hearing on Crypto Versus RBI

After the series of arguments by both RBI and IAMAI’s attorneys, India’s Apex Court adjourns and the hearing will resume tomorrow.

The Supreme Court of India resumed the hearing of ‘Internet and Mobile Association of India vs RBI’ case of the crypto-assets extensively on August 20th. At the resumptions from its previous hearing that took place on the 14thof August, Ashim Sood on behalf of IAMAI, today after hearing it in-depth twice over the past two weeks, argued that the action of India’s central bank (Reserve Bank of India) seems to have been against the “doctrine of proportionality,” besides being based on no study whatsoever. As per the Indian blockchain and crypto news platform Crypto Kanoon reports from the courtroom, Sood referred to the  Securities and Exchange Commission’s Howey Test where it has been citing meticulously about the regulatory requirements in New York and the conceptuality of security tokenization. He further added on the recently released Directive of the European Parliament, which introduced new regulations and a strict set of requirements for companies involved in the crypto-industry.

Sood also referred to Wyoming’s formulation of blockchain laws that emphasized legalization of the underlying technology and its significance; and a legitimatelycomprehensive and conducive mechanism for users and the firms in the region in order to regulate crypto-assets and exchanges. 

On the flip side, the court then heard from Shyam Diwan, the senior advocate who argued on behalf of the RBI, stating that cryptocurrency is just a means of payment, he reminds that such mechanisms will have a direct impact on the country’s monetary and payment systems, particularly if more people continue to use it for this purpose. Further, its use for cross-border transactions is also a problem for the central bank.

While Mr. Nakul Dewan, yet another senior advocate then began arguing on behalf of exchanges, briefing about how the concept of cryptocurrency evolved. Dewan proceeded RBI’s concerns, cryptocurrencies, and the advantages of blockchain technology in the banking and financial sectors. He also read out some parts of the inter-ministerial committee (IMC) report. 

But before the court’s adjournment, Shyam Diwan contested that bitcoin and its peer cryptocurrencies are just Ponzi schemes, highlighting the mounting price turbulences and the huge electricity consumption for the mining operations of bitcoin. 

At some point in time, a judge seemed to have been intervened and stated, “This report seems to guide only on the aspect of how the technology can be used by Intra/ interbank transfers. And not Crypto.”However, Dewan pointed out it also made provisions for official digital currency. After hearing the lengthy arguments the Court adjourns, and the hearing will resume tomorrow.