Indian Central Bank Argues Cryptos 'Not Valid' as Currency in Court Battle

The Reserve Bank of India has argued at the Supreme Court that bitcoin cannot be recognized as either money or currency.

AccessTimeIconSep 13, 2018 at 7:15 p.m. UTC
Updated Sep 13, 2021 at 8:22 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The Reserve Bank of India argued Wednesday that bitcoin cannot be recognized in the country before the nation's Supreme Court.

In a case that has been brought by a number of exchanges against the Indian central bank for blocking their access to banking services five months ago, the RBI stated in an affidavit that current legislation means that cryptos cannot be considered either currency or money.

The RBI stated:

"It is submitted that crypto-currencies fall short of being true currencies. It is further submitted that RBI does not consider virtual currencies such as Bitcoins as 'currency' under the extant laws. There are no enabling provisions under the extant law to treat Bitcoin as currency."

Further, according to a report from CNN's News 18, the RBI continued to say that, as cryptos are peer-to-peer networks and not controlled by a service provider, "They can't even be considered as a valid payment system."

In order to be recognized as a "valid currency" the bank said instruments should "possess identical or similar characteristics of cheques, postal orders and money orders."

The next hearing on the case is scheduled for September 17, the news source indicates.

Back in April, the central bank ordered domestic banks and financial institutions to stop working with the country's crypto exchanges within three months.

Later that month, a petition was lodged against the RBI by Kali Digital Ecosystems, an Indian firm that had been planning to launch an exchange called CoinRecoil in August.

According to the text of the petition, Kali was seeking "an appropriate writ, order or direction quashing the [RBI's] circular." It stated that the ban is "arbitrary and unconstitutional" and that the company is unable to begin operating due to the RBI's restrictions.

The issue has since addressed by petitions from other exchanges seeking to overturn the ban, which the Supreme Court is hearing at the same time.

Since the RBI circular was issued, exchanges have been forced to drop rupee-to-crypto trading services, relying instead on crypt-to-crypto trading. However, trading volumes have taken a big drop and the companies face an uncertain future unless the court rules to overturn the ban.

Court room image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.