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The Supreme Court of India has once again delayed its judgment on the petitions filed by the Reserve Bank of India (RBI) against the cryptocurrencies, leaving cryptocurrency investors in the country scratching their heads at the future of their assets.
India’s stance on cryptocurrencies
A final judgment was expected from the supreme court of India on September 11, which delayed its verdict by a week after a preliminary hearing the nation’s Supreme Court.
In April, India’s central bank, the RBI issued a decree prohibiting all financial institutions in the country from dealing with cryptocurrencies, giving banks a period of three months to comply.
The Supreme Court of India is the only entity that has the power to annul the decree of RBI, its verdict was expected on September 11. However, the decision was postponed, and not for the first time.
A verdict from the Supreme Court was expected in August, however, the court postponed the date to September 11th, and now to the 18th of September, leaving many with critical questions about the future of cryptocurrencies. India’s stance towards cryptocurrencies remains unclear and divided.
While some government officials want nothing to do with cryptocurrencies others have announced their support for the emerging technology.
With no official statement explaining the cause of these delays, many speculate that the respondents involved in the case have not yet filed their submissions to the court. Further delays could be expected.
RBI: Bitcoin is not as valid as a currency
In the affidavit filed through the Assistant General Manager of the RBI, the Central Bank of India states that it does not consider Bitcoin as a ‘currency, and there are no provisions to recognize Bitcoin as currency in the nations existent laws.
According to the affidavit, the Foreign Exchange Management Act (FEMA) of India grants the RBI the authority to name any instrument as a valid currency, however, the act covers only instruments such as cheques, money orders, and other instruments backed by tangible assets.
The affidavit states:
“Thus, legally it may not be possible to notify Bitcoins as currency for the purpose of FEMA. Since bitcoins and other VCs are not in the physical form and neither expressed or drawn in Indian rupees, the definition of ‘Indian currency’ cannot be made applicable to bitcoins.”
The central bank further noted that legalizing cryptocurrencies as valid currencies will have implications on the responsibilities of other regulatory agencies.
This is due to the fact that:
“RBI cannot unilaterally decide for the Government, on the legality of bitcoins.”
Exchange volume slide, OTC rises
Since the central bank of India passed its circular, the trading volumes of cryptocurrencies in India have taken a huge drop on traditional exchanges. However, OTC trading has seen a steady increase in volume.
As a result, cryptocurrency exchanges have come up with ways to transact with cryptocurrencies without the Indian Rupees.
The postponement of India’s final verdict has cast a lot of obscurity over the future of cryptocurrency in India. Until this is settled, it would be difficult for cryptocurrencies in India to witness any substantial growth.
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