Bitcoin gained popularity in India right after Demonetization when people started pouring their wealth to bitcoin and other popular cryptocurrencies which in turn alarmed Financial authorities like "RBI" (the central bank of india) and Income Tax Department to peep in crypto space.
#The interruption of government authorities shed the light on crypto business being run in the country without any regulation.
Major Events in Indian History of Bitcoin
- The first circular from central bank of india RBI "cautioning users of Virtual Currencies against Risks" was released on December 24, 2013.
#click link for full document https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/IEPR1261VC1213.PDF
Finance minister Jaitely on his budget speech in feb 2017 said -
“The government does not recognise cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payments system,” keeping the legal status of virtual currencies in grey zone.In April 2017, Modi led government set up its first committee to look into cryptocurrencies. The panel comprised officials from the finance ministry, the RBI, and India’s market regulator, the Securities and Exchanges Board of India (SEBI) similar to (SEC in USA) . Its report were submitted in July 2017.
As bitcoin got hotter, the government began cracking down on it. In December 2017, for instance, the income tax department surveyed India’s cryptocurrency exchanges & issued tax notices to investors based on their transaction history.
Then, a few banks froze the accounts of some exchanges, reportedly to avoid dealing with crytpocurrency-related money.SEBI (Security & Exchange Board of India) set a committee headed by Subhash Garg, secretary of economic affairs in the finance ministry, to work on formulating a draft law.
The committee promised to submit its report soon, he added, without giving a specific timeline. And the regulations are expected to be finalised by March 2019, Garg said on Feb. 03.The Reserve Bank of India on 5th April 2018 issued a notification prohibiting the country’s banks and financial institutions from dealing in virtual currencies, also known as cryptocurrencies, and providing services to entities dealing in them. Such services include registering cryptocurrency service providers, maintaining their accounts, sanctioning or settling loans against virtual currencies and accepting them as collateral.
#click the link for complete document
https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR264270719E5CB28249D7BCE07C5B3196C904.PDF
After RBI's crackdown, the reaction of crypto community.
- Crypto exchanges and trading community both had challenged RBI by filing writ petition against RBI’s directive in Court House. The petition says that RBI’s order asking Indian banks to suspend their dealings with crypto exchanges is “unconstitutional” as it violates two important articles of Indian constitution:
- Article 19 (1) (g), which allows the citizens to carry out any occupation, trade or business;
- And Article 14, which prohibits discrimination between equals.
- Appeal from the Court House to grant a interim relief for crypto community to delay RBI's Verdict.
After the SC had earlier ordered that all cryptocurrency-related cases be clubbed together and fixed July 20, 2018 as the date for the next hearing, the Internet and Mobile Association of India (IAMAI) had requested that the hearing be brought forward as the RBI’s circular dated April 6 is set to come into effect from July 5.
Accepting the request, the Apex Court had fixed the hearing for 3rd July'18 .
the Supreme Court had refused to grant any relief to cryptocurrency entities. Banks were obligated to stop extending their banking solutions to all cryptocurrency-related entities.The date has been delayed for the final hearing on 11th Sept'18
- Crypto community found Loopholes before the final hearing of the Court House
After the denial of Supreme Court to offer interim relief, virtual currency players moved to new operating models like peer-to-peer transfers or crypto-to-crypto trading.
--India, as worlds fastest growing economy has the chance of being early bird in crypto space and the whole crypto community from the world is eyeing on the final hearing of the Court House that is set for 11th September 2018.
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