A reply by the Reserve Bank of India (RBI) to a New Delhi-based advocate’s Right To Information (RTI) application revealed the bank did not research before placing a blanket ban on dealing with digital currency businesses in the country.
RBI’s Epistemic Crisis
The Economic Times reported the development on June 13, 2018, after lawyer Varun Sethi, a self-styled blockchain lawyer, revealed a set of answers the RBI gave after filing an RTI.
The bank stated it formed no dedicated committee that researched the concept of cryptographic money before deciding to place a blanket ban on digital assets in April 2018, which comes into effect on July 6, 2018.
Although the possession of cryptocurrency is not yet illegal in India, the RBI asked all banks in April to end all ties with cryptocurrency businesses in the country – effectively ending the fiat supply to the market. However, cryptocurrency investors and businesses challenged the decision in the Supreme Court, India’s highest legal authority, citing an absence of reasonable grounds to restrict business or proper stakeholder consultation.
With the development on June 13, media reports suggest the July 6 dictum may be indefinitely postponed, and the government could introduce legislation with relevant riders.
SOURCES | Govt panel not in favour of banning cryptocurrency. Govt panel may suggest allowing cryptocurrency with riders: Cogencis pic.twitter.com/osP6ziwGbO
— ET NOW (@ETNOWlive) June 13, 2018
Lawyer Seeks the Truth
BTCManager gathered a copy of the RTI and can confirm that the central bank responded with an explicit “no” to many questions asked by Sethi. The bank blatantly accepted taking the seemingly arbitrary action and refused to answer any detailed questions in the public information request.
— Blockchain Lawyer (@Blockchainlaw91) June 12, 2018
For example, RBI was asked if it consulted with central bank counterparts in other countries before taking the decision. The Indian authority responded in the negative.
On being questioned if all cryptocurrency entities in the country, including experts in the field of blockchain technology, were present at the time to understand the authenticity of “media reports” about the illegal nature of cryptocurrencies – the authority refused to provide an answer.
In a similar vein, the bank failed to acknowledge self-regulating efforts of Indian cryptocurrency exchanges and services that compulsorily follow KYC norms.
The RTI sought the bank’s authority on issuing such a dictum in light of the mentioned points, only to be refused again. The bank refused to answer questions by citing a loophole in section 2(f) of the 2005 Act, which classifies certain statements as “what is sought is not information.”
A copy of the RTI can be accessed here.