After April 6 a notice from Reserve Bank of India (RBI) to all RBI regulated organizations such as banks and prepaid payment instruments (PPIs) banning them from dealing with or providing any services to entities that deal with any cryptocurrencies such as Bitcoin. The RBI had given a three-month window to these organizations to take the necessary steps on 20th July. But the Internet and Mobile Association of India (IAMAI) had requested that the hearing is brought forward on July 3, and the RBI’s circular dated April 6 is set to come into effect from July 5.
Now, the capping window is almost over and in the breaking development that the Supreme Court of India’s decision has come out in the form of a big blow for cryptocurrency holders due to the refusal of the court to grant an interim relief on the RBI’s banking restriction on cryptocurrency transactions. It means the crypto exchanges will not be able to let traders liquidate crypto assets.
The shadow of SC’s restriction is looming on those dealing in cryptocurrencies because from July 5, the entities regulated by (RBI), which include banks, will terminate their existing relationships with firms or individuals dealing in cryptocurrencies.
“If banking is something the exchanges are not allowed to do, then the solution is something that direct banking doesn’t come in,” Nischal Shetty, chief executive of Indian crypto exchange WazirX, which is now set to introduce P2P (peer-to-peer) trading.
Conventionally, users can buy and trade bitcoins and trade other crypto’s through online banking channels on all exchanges for which they charge a transaction fee on every trade. The RBI’s April circular mandates banks against offering services to exchanges, pushing them toward a P2P exchange.
In P2P trade, the buyer and seller can deal with each other directly while the exchange acts as an escrow account that holds the cryptos during the transaction to avoid cheating.
Albeit, Secretary of Economic Affairs, Subhash Chandra Garg, at the forefront, said that “the draft for regulation on cryptocurrencies is almost ready and will be released in the next couple of weeks. Until the regulations are ready and the matter is completely deposed of, there will be no finality on the fate of trading, yet. However, as multiple exchanges have reminded us, bank operations may be affected or come to a standstill as July 5 draws to a close.”
He further said, “We are fairly close to developing a template (for the use of cryptocurrencies) that might be in the best interests of our country. We have moved pretty far in this regard, and we have prepared a draft that entails what parts of this businesses should be banned and what should be preserved. This should be discussed by the first week of July and we should wrap this up within in the first fortnight of July.”