India’s cryptocurrency exchanges face another 50 days of uncertainty

Under fire.
Under fire.
Image: Reuters/Dado Ruvic
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The wait continues for Indian cryptocurrency exchanges.

On July 20, after a short hearing, India’s supreme court set Sept. 11 as the date for the final hearing. The court will also pronounce the verdict at the end of those hearings—in the cases filed by the bourses against the Reserve Bank of India (RBI).

In April, the RBI came down heavily on these exchanges and traders, ordering banks to close all cryptocurrency-related accounts within three months. The deadline for that came into effect in the first week of July.

Due to the central bank’s crippling regulations, trade has been severely affected in the once booming virtual currency ecosystem of Asia’s third-largest economy. Cornered, the exchanges then dragged the RBI to the apex court. In the last hearing, bourses were hoping for some reprieve but were disappointed.

“We need to wait for about 50 more days now and every day matters as the Indian cryptocurrency ecosystem is getting affected, so we were hoping for a faster decision,” said Shivam Thakral, CEO of BuyUcoin, an Indian cryptocurrency exchange. During the boom last year in November-December, the exchanges were adding more than 100,000 customers a month; the number has now trickled down to a few thousands, according to the exchanges.

The matter is being heard by a three-judge bench of chief justice Dipak Misra and justices AM Khanwilkar and DY Chandrachud.

The trial

Apart from the RBI, the Narendra Modi government, market regulator Securities and Exchange Board of India (SEBI), the Enforcement Directorate, and the income tax department, too, are party to the case.

“There are several government agencies interested in the matter and it is important to take into account their views on the subject. And therefore, such a delay is not unexpected,” said Pushan Dwivedi, an associate at legal firm TRA Law, which has filed the petition on behalf of several exchanges.

Dwaipayan Bhowmick, a lawyer who had in November filed a public interest litigation seeking the regulation of cryptocurrencies, told Quartz that the responses from certain government agencies including SEBI regarding their stand on cryptocurrencies needs to be filed by Aug. 20. 

Earlier this month, in a response to suggestions made by the exchanges to the RBI on how the ecosystem can be regulated, the central bank stuck to its stand that it is uncomfortable with these virtual currencies. Concerns around investor protection, the anonymity of transactions, and the cryptocurrencies’ lack of intrinsic value were the reasons it cited.

Meanwhile, all eyes are on the Modi government which is working on draft regulations for the sector that are likely to be out by September, according to a report in The New Indian Express newspaper.