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On March 4, the Supreme Court of India ruled on a landmark cryptocurrency case in the country.
A court of three judges ruled that the ban on the Reserve Bank of India ( RBI ) prohibiting banks from providing services to cryptocurrency-related companies is unconstitutional .
Kashif Raza, co-founder of Crypto Kanoon, a cryptocurrency regulatory news and analysis platform in India, shared his analysis of the potential impact of this ruling today.
"Positive impact on the entire ecosystem"
In April 2018, the RBI first issued a ban on transactions between banks and cryptocurrency companies, which came into effect in July of that year.
In response to a petition from the public and industry leaders, the Indian Internet and Mobile Association (IAMAI) filed a case against the ban with the Supreme Court. In January this year, the court conducted a two-week hearing.
As Raza outlined in his analysis, today's ruling means that banks in the country will no longer be able to refuse to provide services to individuals, exchanges or industry startups in the cryptocurrency industry.
"This is a historic day," Raza said, claiming that he believes the ruling " will have a positive impact on the entire ecosystem . "
He said that the court's intervention would give courage to those on the edge of the industry, and said that it is expected that new exchanges will be launched, the once closed trading platforms will be reopened, and the volume of transactions and registrations will rise.
In the middle of the case, Raza had emphasized that cryptocurrency regulation in India is still pending. He mentioned last fall that the government decided to postpone a draft of a potential cryptocurrency ban to Parliament.
According to reports, the bill , entitled "Prohibiting Cryptocurrencies and Regulating Official Digital Currency" , is not only aimed at comprehensively banning the use of cryptocurrencies in India, but also to pave the way for the central bank to issue a "digital rupee" supported by the government .
"The Treasury Department can still pass a ban on cryptocurrencies," Raza noted, "or submit the bill to Parliament. But this is minimal ."
Facts, not fictions
Although the future is not a foregone conclusion, Raza believes that RBI's defeat in the Supreme Court is likely to allow the government to wait for some time before rushing to introduce the bill.
He tentatively suggested that one of the countermeasures is that the government will convene a new committee to better understand and analyze the cryptocurrency industry before making any further decisions .
At a hearing in January, a legal adviser to the Indian Internet Mobile Association reportedly argued in court that the RBI had not properly investigated the matter before deciding to take action. "You can't express opinions based on imagination," the lawyer said.
Raza told Cointelegraph that he believes the government now needs to work harder to gather information for itself and conduct a practical check on the facts because:
They know that once they submit the bill to Parliament, the people of India will again sue in court.
He noted that to date, the Bank of India's negative stance, coupled with the uncertainty surrounding the postponed bill, has caused some family members, friends and colleagues to cast doubt on the industry.
Today's ruling will to some extent combat the misconception that, in his opinion, is widespread-that cryptocurrencies have been banned in India. "Everyone is now free to trade cryptocurrencies and use banking channels, which is a good sign," he said.
In an email to Cointelegraph, CoinDCX co-founder and CEO Sumit Gupta described the Supreme Court hearing as a form of active interaction with lawmakers and stated:
This is a great information-oriented opportunity that allows our legislators to understand the cryptocurrency community through this case […] Explain to them the nature of the cryptocurrency industry […] and the possible merger of cryptocurrency in India may Positive impact.
Can India follow FATF's cryptocurrency framework?
As the debate on Indian cryptocurrency regulation is about to resume, Raza believes that the Indian government, as a member of FATF, may play a decisive role:
The FATF is pushing its member states to introduce policies to regulate cryptocurrencies and understand who is trading. The Indian government can follow FATF and see how other countries cooperate with FATF and follow their footsteps. Overall, we are very optimistic and believe that the government will soon formulate guidelines.
The Financial Action Task Force is an intergovernmental organization established on the initiative of the Group of Seven to promote anti-money laundering legal, regulatory, and operational measures implemented globally.
Last summer, the organization released its latest guidelines for virtual asset service providers (VASPs), which include KYC measures that will take effect in June of this year.