Was banning Cryptocurrencies a right decision? RBI has no clue

The government of India, after a dilly-dallying attitude on the use of cryptocurrencies in the country, finally dealt a severe jolt to it in April last. The RBI– the top bank of the country has given a mandate to the lenders to avoid dealing with bank accounts of cryptocurrency exchanges within three months. Since then, these schemes are dying their natural death.

But people wonder whether the action by the Reserve Bank of India’s (RBI) is based on some homework. The answer is perhaps, no.

It was revealed in a Right To Information petition filed by one activist. Varun Sethi, a lawyer from New Delhi, had filed the RTI in the first week of April and had received the reply by May 09.

“It appears by the reply of the apex bank as if the ban was arbitrary. It came into effect without any research from the RBI either. It either responded in the negative or given unsatisfactory answers to the questions asking what led to this ban,” the lawyer explained.

According to the response of the RTI, the RBI though accepted that its representatives have been part of two finance ministry-led committees formed to come up with regulations for digital currencies. But, the government has still not restrained the use of cryptocurrencies. It means, the RBI’s decision may have been hasty, Indian virtual currency exchanges believe.

Moreover, the questions in the RTI plea on why various agencies went on the crackdown, and the bank’s concerns over the virtual exchange system, remained unattended as they claim that they didn’t fall under the categories of the RTI Act.

It may be recalled that since April, exchanges have dragged the RBI to the supreme court on the issue. They are of the opinion that the RBI’s seemingly weak replies will improve the prospects of their case. This RTI can be presented in the apex court as a supporting document against the ban.

The ban, which had very negative and shocking, was enforced without going through significant research. It appears to be a completely superficial decision, a founder and CEO of an Indian cryptocurrency exchange said.

It is also said that there are other countries who are not happy with the growing use of such currencies but none of them has banned it. On the other hand, a number of countries like the US, France, Germany, etc. are trying to understand its dynamics.

The activist concerned, Mr Sethi now plans to file another RTI plea seeking specific answers from the RBI, failing which he will seek a meeting with the RBI officials to understand their perspective.

It is estimated that in India alone, there are approximately three million virtual currency users. it has hurt them as much as it has shocked the exchanges, said the director of such company which plans to launch its cryptocurrency exchange in the next few months.