Cryptocurrency fights for freedom in India's Supreme Court, but opponents see too much risk

After the trial began last August, this week, a panel of three judges at the Supreme Court of India reconvened to discuss the hyped "Cryptocurrency v. RBI (The Reserve Bank of India," hereinafter referred to as RBI) "case. At a recent hearing, the Indian Supreme Court asked the RBI to clarify its position, explain exactly why the country's cryptocurrency market was banned nationwide, and discuss the possible unconstitutional nature of its actions.

Since the RBI's decision to issue this highly controversial ban, prominent figures in the Indian cryptocurrency community have filed a number of public and industry-led petitions, claiming that RBI's move is not only unfair, but also a clear violation of the law.

In its response , RBI's legal adviser stated that the central bank has full authority to operate India's currency and credit system and protect the country's overall financial stability-as long as it feels necessary to do so.

In response, the Indian Internet and Mobile Association (IAMAI) has filed a petition, and the Supreme Court is currently hearing the petition. IAMAI is a non-profit industry organization that aims to expand and strengthen India's online and mobile value-added services industry.

latest progress

The above cases were re-tried earlier this week. Opened at the time by IAMAI's defense lawyer, Ashim Sood, he recalled the arguments discussed in court last August. First, he explained to the judges the basics of cryptocurrency and blockchain technology and read out the guidelines issued by the Financial Action Task Force last year.

In addition, after explaining how countries such as Australia, Malta and Japan have successfully regulated their own cryptocurrency markets, he emphasized the need to provide blockchain / cryptocurrency business owners with traditional banking channels. Under this favorable regulation, investors and occasionally keen competitors can acquire digital currencies in a streamlined and transparent manner.

Cointelegraph interviewed Sumit Gupta, CEO of the Indian cryptocurrency exchange DCX. He believes that, given proper and reasonable supervision, the lawyer Sood provided some good arguments in terms of how the technology works and its use:

"On the anonymity of virtual currencies, he explained the rigorous KYC process adopted by various exchanges. He believes that although the industry follows strict self-regulation, it is not able to enforce self-regulation to a certain extent. Emphasizing the importance of active regulation. He argued that every new technology has a gray side, however, active regulation can curb negative effects, which is exactly what is needed in the current situation. "

As part of its defense, the RBI mentioned incidents such as the 2019 Binance KYC vulnerability incident , which clearly demonstrates why the entire crypto industry is still in its infancy, so it will give any country that allows it to grow and grow The economy poses a huge cybersecurity threat.

However, Sood told the judge that such cyber attacks are exactly why India needs active regulatory measures so that the industry can better respond to such challenges.

He also mentioned several previous judgments passed by the Supreme Court of India, which clearly reflect that only when the Indian Parliament rules that there is a clear risk to a legitimate activity and not an administrative body like the RBI Was stopped. In response, he added:

"RBI's arguments may not sound enough, but it is up to the judges. Our judicial procedures are strong enough and we have full confidence in them."

Finally, Kashif Raza, the founder of Crypto Kanoon, an Indian crypto messaging platform that continues to report on ongoing hearings via Twitter, told Cointelegraph that the primary purpose of IAMAI's legal advisers is to confirm that the Indian crypto community is not trying to Digital assets are treated as currency, but as another option for investment. He further added:

"IAMAI directed the court's attention to the Financial Action Task Force's (FATF) guidelines that did not mention the fact that cryptocurrencies should be completely banned. India is a member of FATF and the agency's In the guidelines, when controlling the cross-border movement of cryptocurrency assets, most regulations require its members to perform KYC and better collaboration. "

Indian judge appears to be open

The Indian judge currently hosting the hearing seems to be curious about crypto-based technologies and the huge economic potential they represent. For example, they asked IAMAI's legal advisers to explain how countries such as Australia, Italy, Malta and Japan regulate cryptocurrencies, and whether money laundering or tax evasion has increased following the implementation of these measures.

In response, Sood began to provide judges with a detailed comparison table covering different countries, the nature of their polities, and how they deal with issues related to cryptocurrencies in their respective jurisdictions. In addition, he cited the example of Mt. Gox and how the company's bankruptcy led the Japanese government to create an effective regulatory framework.

Related link: Indian income tax department is secretly training officials to investigate cryptocurrencies

The judge further asked him to explain in detail how the current cryptocurrency and peer-to-peer trading model works, and how digital currency transactions actually take place. In response, Sood explained to the group the various laws currently in use in South Africa, the United Kingdom, and certain states in the United States that allow people to conduct digital asset transactions in a completely legal and taxable manner.

Finally, the Supreme Court asked IAMAI questions about various suspicious services, such as the Silk Road, Dark Web, Tor and Onion Routing, and how these channels have been used by bad guys in the past to trigger abuse of digital currencies. However, the judges also acknowledged that cryptocurrency technology, like other technologies, is not bad in itself, but when it is manipulated by criminals, it may be used to achieve various evil purposes.

To elaborate on this issue, Varun Sethi, CEO of Blockchain Lawyer, told Cointelegraph: "RBI cannot completely rule out the belief that the anonymous nature of cryptocurrencies poses a threat to national security." He added that indeed, cryptocurrencies can flow freely between international borders, while at the same time cybersecurity risks are hard to deny. He went on to say:

"However, this statement is similar to the challenges facing other regulators. The court will certainly notice similar facts and how other countries have handled them."

Supreme court expresses concern over some key issues

Although the Supreme Court seems to finally understand the potential of cryptocurrency and blockchain technology in transforming many local industrial sectors, it does express concerns about the use of digital assets for money laundering and tax evasion.

Tab2sum Naiz, the founder of Bit2Buzz, an Indian cryptocurrency center that provides users with a lot of educational content, also delved into the above points. He pointed out to Cointelegraph that recently, many established Indian financial / banking entities have been affected by a series of cyber security vulnerabilities and The threat has suffered significant losses. Naiz hinted at banks such as the Housing Development Finance Corporation (HDFC), the Industrial Credit Investment Bank of India (ICICI), the State Bank of India, Axis Bank, and Punjab National Bank Involved in a massive scandal about money laundering and data breaches.

Although local cryptocurrency exchanges do use the KYC protocol to minimize the occurrence of such problems, their security measures are largely self-designed and therefore need to be verified by a central regulatory agency. In this regard, Sethi emphasizes:

"If the KYC process of an exchange is strict and verified by government regulators, then the argument that all cryptocurrency transactions are only used for anonymous transactions will not hold. This is where government policy is needed."

Gupta also reiterated Sethi's views and claimed that self-regulation has its limitations, and that the government's regulatory framework will actually solidify India's crypto ecosystem-a point that Sood and his team debated fully last week.

Finally, the court read out a World Bank report on mining-based power consumption to highlight the potential negative impact of the crypto industry on India's power sector. However, the judges then elaborated on the various advantages of cryptocurrencies and how they have the potential to serve undeveloped banking or unbanked areas and fill many of the current deficiencies in the Indian payment market.

Supreme Court tortures RBI

As mentioned earlier, the RBI claims that it restricts crypto activities in India due to the lack of clear regulations, especially in terms of financial anonymity, money laundering, etc. However, the judges believe that it is the RBI (and not the local cryptocurrency exchange) that is responsible for designing a regulatory system that incorporates cryptocurrencies into India's overall financial framework. In essence, the Supreme Court of India considers the RBI ban as a means of transferring burden and is unfair.

Similarly, when the RBI stated that digital currencies were only used by those who wished to cover their identity, Sood told the judge that this situation was actually wrong, and many people just regarded cryptocurrencies as alternative investment options for traditional stocks and bonds .

What will be the decision?

Judging from the current situation, it may be too early to say which side the judgment will favor, especially since the RBI has not yet presented a complete argument to the judiciary. However, Gupta believes that IAMAI's petition will be of great help, and judges will see the value of cryptocurrencies in the arguments put forward by the independent organization, saying, "We are convinced that judges will see in our arguments Justification for the court to make a fair and favourable decision. "

RBI is expected to submit all remaining statements on Tuesday, January 21, expressing concerns about cryptocurrencies.

Original link:

More information: CointelegraphChina or login