The Reserve Bank of India has responded to a query
seeking explanations for its reasons to ban banks from dealing with the
cryptocurrency industry, admitting it conducted no research prior to its
prohibitive action.
In a Right to Information (RTI) request filed by a
domestic lawyer Varun Sethi, the Reserve Bank of India was – over a
number of questions – plainly asked for the reasons behind its April ban
that explicitly forbade all regulated financial institutions from providing services to cryptocurrency businesses.
RBI confirmed it gave little to no thought before
reaching the decision in its response, nor did it conduct any research –
internally or independently – before enforcing the ban.
In what is increasingly appearing to be an
arbitrary action, the central bank did not clarify its position and
plainly refused to answer other probing questions put forth in the
information request.
For instance, central bank officials were asked if
the authority established an internal committee to determine if there
were risks in trading cryptocurrencies. “No” was the answer.
Had the RBI conducted its own research, or even
communicated with other counterparts – think Japan – to understand and
explore a regulatory framework prior? Again, “no”.
The RBI also refused to clarify how it had determined public risks in engaging cryptocurrencies, from as early as 2013.
Similarly, it refused to disclose its take on acknowledging
self-regulated cryptocurrency exchanges that follow KYC norms, if it had
sought an external expert opinion before enacting the ban or if it will
prohibit Indian citizens from buying cryptocurrencies from exchanges
outside the country.
The central bank ducked all these questions by pointing to a loophole in the RTI act, exempting them from giving an answer.
The RBI’s ban in April came after years of repeated public warnings by the financial regulator, cautioning citizens against trading or investing in cryptocurrencies like bitcoin.
Last month, the central bank pushed back against a
Supreme Court-approved petition that sought regulation to effectively
legalize and recognize the cryptocurrency industry in the country. In
fact, the RBI deflected responsibility in outlining a policy or framework for the nascent sector, stating “the
RBI cannot unilaterally decide for the government on the legality of
bitcoins” in India.
A number fo cryptocurrency businesses have since filed petitions at state courts arguing the RBI decision was “arbitrary, unfair and unconstitutional“.
Witnessing an increasing backlog of those petitions, India’s Supreme
Court barred all high courts from filing further petitions against the
Reserve Bank and claimed all pending petitions in May.
This article comes from ccn.com immediately removed if infringement.
