Ever since the Finance Minister made a clear statement while presenting the Union Budget in February that the government does not recognize cryptocurrencies as legal tender, those dealing in Bitcoin and other digital currencies have been in trouble. The government said it does not intend to stop the trading of cryptocurrencies in the exchanges, but no transaction of any kind made with them will be acceptable as legitimate payments.
The Reserve Bank of India followed this up with a directive to all banks to keep away those customers who were operating their accounts and using the funds to deal in cryptocurrencies. This has further affected the individuals and entities engaged in buying and selling Bitcoin and the have now taken the RBI to the Supreme Court to withdraw its directive.
The directive by RBI covered virtually all financial bodies, including banks, non-banking companies, digital wallets and practically any other institution and the date set for full compliance was July 5.
These Bitcoin traders are trying to take advantage of the thin line between a complete ban on cryptocurrencies and their being not accepted as legal tender. They say that as long as there is no ban on these currencies they cannot be barred from dealing in them and cutting of banking support to them is not acceptable. It is interesting to note that 2 other entities, a cryptocurrency exchange CoinRetail and a trader moneytradecoin have already files cases in courts against the move by RBI.
From RBI’s perspective it was trying to protect the public from being exploited by unscrupulous elements in the trade who lure them by offering high return if they invested in Bitcoin. Some of the leading economies in the world, including Japan, China, the US and South Korea have already acted in similar fashion through their respective central banks to put curbs on the dealings in cryptocurrencies through normal banking channels.
If the Supreme Court does not come to their rescue, these operators will have to move their businesses overseas. A country like Malaysia could be an easy choice, if they were to decide so.