Reserve Bank of India Says Bitcoin Is not Currency

Reserve Bank of India says Bitcoin is not currency, adding that “there are no enabling provisions under the extant law to treat Bitcoin as currency.”

14 September, AtoZ MarketsThe Reserve Bank of India has been active in the past days. After yesterday AtoZ Markets reported that it has given green light to the Blockchain BRICS research by banks, today, there is yet another news coming from Indian officials. 

Reserve Bank of India Says Bitcoin Is not Currency

The Reserve Bank of India has stated that Bitcoin cannot be recognized before the nation’s Supreme Court in the country. There is a case that has been brought by a number of exchanges against the central bank of India for restricting their access to banking services around five months ago. Regarding this case, the RBI has stated in an affidavit that current legislation implies that cryptocurrencies cannot be regarded as money or currency. 

The RBI has noted:

“It is submitted that crypto-currencies fall short of being true currencies. It is further submitted that RBI does not consider virtual currencies such as Bitcoins as ‘currency’ under the extant laws. There are no enabling provisions under the extant law to treat Bitcoin as currency.”

Moreover, as per some of the online reports, the RBI Has stated that cryptocurrencies “can’t even be considered as a valid payment system.” This is due to the fact that they are peer-to-peer networks and not controlled by a service provider.

RBI Crypto Ban for Local Banks

In order to be seen as a “valid currency,” the RBI stated that instruments should “possess identical or similar characteristics of cheques, postal orders, and money orders.” The next hearing regarding this case will be held on September 17, according to the local news outlets. 

Earlier this April, the Indian central bank has ordered local banks and other financial institutions to cease working with country’s cryptocurrency exchanges. On the 5th of April, the RBI has published a statement from the Chief General Manager Jose J. Kattoor in relation to the development and regulatory policies. He has spoken regarding RBI’s approach to virtual currencies, as he also has addressed the prospect of central bank digital currency (CBDC).

Kattoor has written in his statement:

“It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs,” wrote Kattoor. “Regulated entities which already provide such services shall exit the relationship within a specified time.”

Reportedly, Deputy Governor Bibhu Prasad Kanugo has stated that central bank-regulated firms that are dealing with cryptocurrency related businesses will have a deadline of three months to finish their relationships.

RBI Crypto Ban Petition

Later on, a petition has been filed against the RBI by Kali Digital Ecosystems. The latter is an Indian firm that has considered the launch an exchange called CoinRecoil in August. As per the petition, Kali was seeking “an appropriate writ, order or direction quashing the [RBI’s] circular.” 

It has stated that the RBI’s ban is “arbitrary and unconstitutional.” It also has added that the company cannot begin its operations due to the decision of the RBI.

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