After major Indian banks, including HDFC Bank and State Bank of India (SBI), sent emails to customers for clarification on cryptocurrency trade, the Reserve Bank of India (RBI) has affirmed that banks cannot use the 2018 notice for such communications. This is because the notice was suppressed by the Supreme Court of India on a case filed by the Internet and Mobile Association of India in March 2020. In this article, we will discuss – is crypto mining legal in India?
The RBI stated –
It further added –
Shortly after the RBI clarification on cryptocurrency trade, RBI witnessed reactions that were flooded from the pro-crypto lobby. They welcomed RBI to initiate a move and interpreted it as a movement from the regulator in support of the growth of the digital currency business in India. CoinDCX CEO & Co-Founder, Sumit Gupta, said –
CEO of Coinswitch Kuber, Ashish Singhal asserted,
Now the question arises, does this clarification on cryptocurrency trade imply that the RBI is planning to endorse crypto trading or cryptocurrency ban in India 2021 really happening? Certainly, RBI is not endorsing what we know as of now.
The manager, in fact, has not spoken about the validity of digital currency in India. It has only tried to avoid a strictly legal issue — appealing a contempt of the apex court by keeping silent when a group of financial institutions in India has used its decrepit, invalid notice to keep the crypto lobby aside.
This is the scenario because in March 2020 when the Supreme Court suppressed the crypto notice on a case by the Internet and Mobile Association of India on the Reserve Bank of India, the defendant was the RBI and not the banks and, hence, any further proceedings will befall on the RBI, and not on the banks if the crypto lobby moves court against banks using the 2018 RBI notice.
It is clear that the RBI doesn’t want to invite the embarrassment of Contempt of Court and invite the wrath of the judiciary in this matter. Hence, the manager has only assured its position with the clarification on cryptocurrency trade.
On March 25, the RBI Governor, Shaktikanta Das while speaking at the 7th edition of India Economic Conclave, said that the central bank has raised some major issues to the Government about digital currencies and the legality of cryptocurrency in India.
The Reserve Bank Of India is not at all comfortable with digital currencies being a medium of exchange in our country. Having said that, the government’s viewpoint on this same issue is still very unclear. The government has scheduled to present a Bill that will regulate cryptocurrencies known as “The Cryptocurrency and Regulation of Official digital currency Bill, 2021”. The Bill has avenues to make any exchange or dealings in digital currency illegal.
Now a question may occur: Is Bitcoin mining legal or will it affect people searching for how to start cryptocurrency mining in India and is bitcoin mining legal? How much is the Bitcoin ban in India true? All that we can say is if any law is enforced on digital currency, every crypto will fall under it. But there are no further details on when this Bill will be introduced in Parliament.
So what is next? The RBI clarification on cryptocurrency trade has, in fact, initiated more uncertainty. The topic is now open to be interpreted on both sides.
As it is clear already, the crypto lobby will now likely allege the RBI clarification to convince banks to open their avenues for trading in crypto. Banks have so far remained away from such requests citing a lack of clarity from the manager on this issue and quoting the 2018 notice. Banks aren’t comfortable dealing and exchanging in cryptos as it is a high risk, high fluctuation instrument and there is a lack of proper regulation.
So now there remain a few questions. Is cryptocurrency legal in India 2021? Is Bitcoin banned in India? And the answers are still not clear. It will unfold with time.