India: Bitcoin still legal?

Crypto currencies have found an unlikely ally in their quest, as they may now be legalized after intense litigation between businesses, consumers and the Reserve Bank of India. The recommendation to legalize crypto comes from the Indian Legal Commission, as it is an important part of their complaint against a blanket ban on sports betting and casinos.

India’s controversial ban on crypto currencies

The Indian government’s fight against virtual currencies began in April 2018, when the Reserve Bank of India (RBI) banned all financial institutions from trading in crypto exchanges. The result of this ban was serious, as it dried out the liquidity of the stock exchanges concerned and damaged the Indian-based crypto-currency investors. RBI gave banks three months to break off all connections to crypto companies. The Indian Central Bank made a Bitcoin Profit statement at the time of the ban in which it said:

“It was decided that with immediate effect, the companies regulated by RBI may not provide services to individuals or companies trading or processing crypto currencies. Regulated companies that already provide such services must terminate the relationship within a certain period of time”.

When the deadline became apparent in July, the stock exchanges and investors intensified their efforts to protest against the ban on the crypto currency and filed their petitions in the country’s highest court.

Crypto and Bitcoin Code ban

The Indian Supreme Court, led by Chief Justice Dipak Misra, ruled in favor of the RBI, upheld the crypto ban and accepted the arguments of the RBI. The main argument of the RBI was that Indian law by nature prohibits crypto currencies, as it requires all legal currencies Bitcoin Code to be physical and stamped by the government.

India’s ban on crypto was only temporary
After the court’s decision to maintain a blanket ban on crypto currencies, there was another turn in the complicated situation. An unnamed government official within the Indian government recently told Quartz India that the government is indeed opposed to a comprehensive ban on the trade in crypto currencies and is considering classifying them as commodities instead.

“I don’t think anyone really thinks about banning it (crypto currencies). This is about regulating trade and we need to know where the money comes from. Allowing it as (a) commodity can make us better regulate trade and so it is considered,” said the anonymous senior government official.

The government official seemed to suggest that the April ban was rather a temporary measure introduced as the government examines how the industry should be regulated. He also explained that the government is not concerned about crypto currencies themselves, but about the illegal activities for which they could be used.