RBI Issues Restrictions on Cryptocurrency Which Violates Indian Fundamental Rights
The crypto community seems to never get a break from the law particularly in India. This year proves to be no better with a recent press conference by the Reserve Bank of India (RBI) that has stirred a frenzy in the media and brought shock to crypto traders.
“RBI has been continuously posting warnings and precautions to the crypto community in India with respect to their security as there are numerous legal and operational risks to cryptocurrency trade and investment. The claim that RBI made concerns the risks of the crypto market and it’s traders. Meanwhile RBI is growing weary of the rising number of crypo traders that come from the Indian public.”
There is still confusion and uncertainty about the status of cryptocurrencies in India with the recognition of Blockchain technology and high praise for its potential use in India’s digital economy. However the government and Hon’ble Finance Minister have still has not accepted cryptocurrency as a legal tender and issue frequent warnings regarding its use. There is a economic dichotomy in the conceptualisation of Blockchain and it’s systems thus leaving the Indian crypto community dazed and at polar opposites concerning the minister’s stance on crypto currency and possible endorsement in future.
Ever since the press release of RBI, the crypto community has felt the pressure of the bank on trading in a decentralised system. Crypto traders are torn between the government praise for Blockchain but on the other side of the coin it is proposing against cryptocurrency usage and investment. The most common warnings issued are for money laundering, fraud, market volatility, and lack of consumer protection. RBI has also established that any business that works with cryptocurrency or uses it for transactions is excluded from the banks services. This results in businesses being unable to transfer money using crypto wallets to their RBI bank accounts. Some common crypto wallets are Zebpay, Coinsecure, Unocoin and more.
More concern for the crypto community comes from RBI power to delegate to other banks using Section 35A of the Banking Regulation Act, 1949. The bank had done the same in a press statement in December of 2013 warning against cryptocurrency usage. RBI simply proposes the various risks of crypto for the protection of the public but fails to elaborate on the reasons for such risks in the market. It’s stance on the matter of cryptocurrencies in India should be provided with some research and legitimate backing.
Furthermore, since RBI is regarded as a t “State” under Article 12 of the Constitution, it is prohibited under Article 13 to propagate any direction to the public which is in violation of Indian fundamental rights highlighted in Part III of the Constitution. Therefore, any direction that is proposed which goes against Article 13 will be considered null and void.
The direction or stance taken by RBI is violating the Indian fundamental right to carry out trade guaranteed to the crypto exchanges under Article 19 (1) (g) of the constitution.
In order for RBI to restrict other banks in dealing with crypto businesses and issue warnings to users in the name of public interest, it can do so under Article 19 (6), but only provided that RBI elaborates on the impending risks it so strongly believes in. Without further explanation on these claims it cannot be issuing warning and press releases against cryptocurrency.
Despite these terms provided by the constitution, RBI has gone ahead and decreed a blanket restriction on cryptocurrencies and crypto business relations with other Indian banks. It’s direction is to restrict all cryptocurrency usage in businesses and limit the services that traditional banking will provide to such business entities.
The only move available to the crypto community is to be patient and wait for legal justice that will come as rule of law in India is ultimate. According to legal process, cryptocurrency should be able to flourish and restrictions should be lifted if the government abides by the laws it’s own legislators have issued. The same may not be said for alternate avenues where cryptocurrency is struggling but in the name of the law cryptocurrency will rise once again.