The Reserve Bank of India had imposed a ban on cryptocurrency trading in April 2018 that barred banks and other financial institutions from facilitating “any service in relation to virtual currencies.”
The move understood to be necessary at the time to curb “ring-fencing” of the country’s financial system. It had also argued that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor were they stamped by the government.
In a landmark judgment, the country’s highest court today (March 4) overturned central bank’s two-year-old ban on cryptocurrency trading in the country; India’s banks can now finally go back to dealing with cryptocurrency exchanges.
The supreme court today said the Reserve Bank of India (RBI) order was “unconstitutional.”
The lifting of the ban by Supreme Court is expected to open many new opportunities for India in terms of investments, economy, and a market as a whole. Tanvi Ratna, chief executive and founder of Policy 4.0, which works on crypto policymaking in India, wrote in a pre-verdict analysis on Tuesday the win would mean for “a resurgence of liquidity and resumption of activity with exchanges and other startups” for the ecosystem.
But Tanvi also cautioned the verdict could still be a “short-term respite” since the verdict against the RBI “does not directly impact actions on the policy level.” And according to her:
“What is logical to conclude is that if the verdict goes against the actions of the central bank, there might be re-thinking on the issue within our financial policymakers. There is no guarantee this will happen, though, especially if the verdict only address the question of regulatory overreach of the RBI, and leaves sufficient leeway for policymakers to decide upon the treatment of cryptocurrencies.”