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