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RBI V/s Crypto: Supreme Court Directs RBI To Respond To Petitioners’ Representation In Two Weeks

22 Aug 2019

After lunch, the counsel for the Reserve Bank of India (RBI) continued its defense for introducing the banking ban for cryptocurrency and exchanges in India.Citing two judgements, the central bank said that the circular is in  is in supplement to the statutory provisions enunciated by Banking Regulation Act which has to be considered to be having statutory force. The counsel further added that RBI was fully aware about the risks etc. with Crypto, the it was incumbent on it to take action under the delegated legislative power it has been conferred with.At this point, Justice Nariman asked, “Which provision says that you have to be ‘satisfied’?”, to which the counsel responded saying Section 35 A of Banking regulation Act and Section 18 of PSS Act, 2007. To which the judge asked, so this satisfaction is not in connection of you (RBI) being an administrative authority but in the shoes of a legislature’s delegatee? The Counsel said yes since RBI has to deal with the challenges posing threat to the established system.The two arguments put forward by the petitioners was answered by the RBI: Vagueness of Circular – RBI has sufficiently described crypto in various docs and the Cheese Burger Argument: RBI powers are well defined and can be exercised when there threat to monetary, fiscal and financial policy, with which Shyam Divan, counsel for the RBI, concluded his statements.The judge then turned to the petitioner and asked, “RBI is an expert body which has taken decision on the basis of a study, then who are we to interfere in their policy? The question is not whether it is arbitrary or not, bit whether they can legislate or not when they are ‘satisfied’ under 35A!”The petitioners responded arguing how RBI changed its stance from caution to prohibition. This happened the first time last year, when Arun Jaitley, the then Finance Minister brought up cryptocurrencies during the budget session.The petitioners further argued, “RBI is bereft of any empirical data which supports their stance that they are ‘Satisfied’. There is no data at all which they rely upon to say that it is threat to our monetary stability. The argument of satisfaction is baseless.”Ashim Sood, the counsel for IAMAI spoke up after Divan was done with his arguments. Justice Fariman asked him, “They (RBI) are the expert body, they monitored the position, in the realm of economic policy and financial policy they have taken action, so what do you have say on the point of satisfaction?”Sood responded by saying, “My Lord yes it is a question but the point of satisfaction can be considered when there is a data to substantiate that. Secondly, satisfaction of one authority cannot be allowed to be taken effect from the satisfaction of other authority. Meaning thereby, RBI cannot take action based on the study held by others.”He further added, “Argument of Ponzi scheme and consumer are in trouble, are merely statements which cannot be substantiated with data.”He also brought up the recommendations that the exchanges had given to the RBI, as an alternative to imposing a banking ban, following which the judges fell to discussing the matter among themselves. At this point, it appeared, Justice Fariman appeared to lose his cool at RBI and said, “Why you have not properly responded to the representation. You just said that we are forwarding to government,” and added that it was not an answer.The judge further directed the RBI to come up with an answer in two weeks, to which the central bank said yes.Now justice Nariman questions RBI why you have not properly responded to the representation. You just said that we are forwarding to Govt. Angrily says this is not an answer.— Crypto Kanoon (@cryptokanoon) August 21, 2019The court orders read, “After hearing arguments we are of the view that detailed representations by exchanges purusant to this court’s order 17.05.2018, have not been answered point by point, therefore RBI to reply them with in 2 weeks. Solicitor General to furnish various documents within 1 week.”Liked what you read? Join us on Telegram

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