India’s courts are unlikely to fix the crypto crisis anytime soon

Waiting for clarity.
Waiting for clarity.
Image: REUTERS/Dado Ruvic
We may earn a commission from links on this page.

The courtroom battle between India’s cryptocurrency exchanges and the central bank is set for its next hearing today—but nobody expects an end to the stalemate.

Cryptoexchanges are challenging a Reserve Bank of India (RBI) order, which had, in April 2018, forbidden banks from transacting with them. Lawyers Quartz spoke to, however, suggest today’s hearing may be postponed.

The cryptobourses had dragged the RBI, and various government agencies, to court following the diktat to banks, which came into effect in July. Given that several exchanges had filed different cases against the RBI in courts across the country, the supreme court had consolidated the petitions and commenced the hearing in May last year.

After dismissing the exchanges’ request to provide interim relief, the apex court had set the final hearing for September. While it was widely expected that the case would reach a conclusion in the following weeks, there has been little development and it is likely to stretch for some more time.

“The case is listed to be heard on Jan. 15 but it is unlikely to be taken up on the day as there are other matters that have to be heard prior to that,” said a lawyer representing some of the exchanges, requesting anonymity. “In fact, it is unlikely to come up for hearing this entire week.”

In the last hearing, in November, lawyers representing the exchanges had asked for a full day from the court for hearing so that the case could be expedited. Despite this, delays are expected.

To destroy or regulate

Meanwhile, the Narendra Modi government has not disclosed its regulatory stance on cryptocurrencies yet, which has only compounded the legal problems.

Documents submitted by the government in the supreme court last November revealed that a committee under Subhash Chandra Garg, secretary in the department of economic affairs, is working on a draft bill. But no specific timeline has been created for the draft to be tabled. The Garg panel was scheduled to meet in January, but there is no word on the outcome of the meeting, or whether it even happened, till now.

The Modi government, meanwhile, has been sending mixed signals on its stance on cryptocurrencies. At one point, it seemed that the government favoured a blanket ban, later it was speculated that it favours only tight regulation. The industry has thus been oscillating between despair and hope.

The year 2018 was a terrible one for the virtual currency industry in India, which, besides regulatory setbacks, had also borne the brunt of waning customer interest as prices tumbled. Now, traders and exchanges have their hopes pinned on the new year, hoping there will be clarity on the legal and regulatory fronts.

Want to read more from Nupur Anand? Subscribe to Quartz Private Key—Quartz’s premium crypto newsletter, delivered twice weekly.