India’s Supreme Court has lifted a virtual ban on crypto trading instituted by its central bank in 2018. The court ruled in favor of cryptocurrency exchanges, which had filed a case against the Reserve Bank of India (RBI), and questioned the “proportionality” of RBI’s actions in its ruling.
“RBI needs to show, at least, some semblance of any damage suffered by its regulated entities. But there is none,” the court stated. While cryptocurrency exchanges based in India routinely claim trading volumes that run into millions of dollars, it is difficult to verify the truth of those claims in an era of rampant fake volumes at such venues.
The central bank has issued numerous circulars in the past to inform customers about the perils of investing in an unregulated digital currencies and exchanges. In April 2018, it issued a circular barring financial institutions in its network from providing services related to virtual currencies.
Several crypto exchanges and services in the country were forced to shutter operations as a result of the ban. Others were acquired. For example, WazirX, a peer-to-peer exchange, was acquired by Binance last year. Nischal Shetty, CEO of WazirX, told news outlets that yesterday’s decision by the Supreme Court was a “historic day” for crypto.
Sumit Gupta, CEO of CoinDCX – a crypto exchange that filed one of the petitions against the ban, stated that the court hearings were an opportunity to “engage directly with lawmakers” and explain the “nature” and legitimacy of crypto technologies to lawmakers.
An Attractive Market for Cryptocurrencies
India’s young demographic and large, unbanked population are an attractive proposition for digital currencies. The government there is already reported to be mulling a digital currency.
Lifting of the ban could also crack the door open for regulation of cryptocurrencies and fintech offerings in the country. Social media behemoth Facebook could benefit, for one. The Menlo Park company’s Libra cryptocurrency and blockchain could benefit from a change in regulations and open up the company’s second-biggest market to a payments solution designed by it.