India’s crypto regulation is reportedly ready and there has been much speculation about what it contains. An Indian lawyer has gotten some answers from the Reserve Bank of India about a bill allegedly seeking to ban cryptocurrencies. Surprisingly, the central bank claims that it does not have any knowledge of this bill and did not endorse any ideas towards a complete ban on cryptocurrencies.
RTI Request to RBI
Indian lawyer Varun Sethi, founder of Blockchain Lawyer, revealed Wednesday that he has received a reply to the Right to Information (RTI) request his team filed with the country’s central bank, the Reserve Bank of India (RBI).
This RTI was filed on May 7 following an article published on April 26 by the Economic Times about a bill entitled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019.” The article cites an unnamed government official claiming to have knowledge of the bill. “Our team was expecting to get insights about RBI role in helping draft the bill since it had been proactive in educating and informing investors about risks of cryptocurrencies,” the Blockchain Lawyer team explained after receiving a reply on June 4.
While the article claims that several government ministries were involved in the drafting of this bill, Sethi and his team decided to file their RTI with the central bank. Noting that the RBI has been a key minister in informing investors about the risks associated with cryptocurrencies in the past, Sethi explained:
We feel that the Reserve Bank has been issuing these notifications to investors so we thought that they must be aware of this bill and I feel that they are a good contributor to this proposed bill so they might have some information.
This is not the first time Sethi filed an RTI with the central bank. After the RBI issued its infamous circular in April last year banning banks from providing services to crypto businesses, he filed an RTI asking what research it did before imposing this restriction. “The RBI specifically mentions that it conducted no research or consultation before the implementation of [the] restriction,” he was quoted as saying. A number of industry participants have filed writ petitions with the country’s supreme court to lift the ban. The court is expected to hear the case on July 23.
Another RTI was recently filed regarding this bill but with the Department of Economic Affairs instead of the RBI. However, it was rejected based on RTI’s Section 8(1)(i).
RBI Denies any Knowledge or Involvement
The RTI Sethi filed contains five nine-part questions primarily concerning the central bank’s role in the aforementioned bill.
In its reply, the central bank denied “any written correspondence from other ministerial departments officially to RBI,” declared that it had never “sent out official communication to other departments for this matter,” and confirmed that there had not been “any communication received from Central Government in this matter.”
Further, the RBI claims that it had neither received any copy of this draft bill nor held any internal meeting “to discuss, deliberate and decide the plan of action ahead of how to ban cryptocurrencies and regulate official digital currency bill.”
RBI has actually stated that they have not received any communication from any department and they have also not given any communication to any government department pertaining to [the] drafting of this bill and this is very surprising.
The lawyer reiterated, “we felt that RBI was a very crucial contributor for drafting this bill,” noting that “this is very interesting that if a draft bill is being created, [and] no communication either to or from RBI has actually happened.”
RBI Did Not Endorse a Complete Ban
The Economic Times article also reported that “A number of government departments including the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA) have endorsed the idea of a complete ban on the sale, purchase and issuance of all types of cryptocurrency,” citing the unnamed government official.
Responding to questions about its involvement, the central bank proceeded to deny endorsing any such idea to other government departments, emphasizing that it never received any “written communication” or “copy of such endorsement from any other government department in this matter.”
RBI did not actually propose any ban on crypto assets … [We also asked] did anyone else also propose these things to RBI … RBI said no.
Moreover, the central bank also does not have information to share regarding any delays on crypto regulation.
Why Wasn’t RBI Involved?
According to the Economic Times, the unnamed government official told the news outlet that the crypto-banning bill had been “circulated to relevant government departments.”
One of the questions in the RTI concerns the relevancy of the central bank for the drafting of this bill. “Is there information that RBI is not the relevant authority to take decisions in this matter?” Sethi asked, anticipating that the central bank might say that it had no knowledge of this bill. The central bank simply replied that it “does not have information in this regard.”
Drilling deeper, Sethi asked if the RBI had made any efforts to obtain a copy of the draft bill that had apparently been circulated to other relevant government departments, given that the RBI claims on its website that it “has been initiating many investor education notifications educating investors to refrain from investing in cryptocurrencies and risks involved therein.”
He also questioned, “what are the legal rights as per the powers entrusted with RBI, in case the bill is being discussed without the knowledge of RBI?” While maintaining that it did not have the information to answer these questions, the central bank confirmed that it had never “issued any circular/notification/public communication in this matter on its official website regarding such bill.”
Regarding the view of the committee with representatives from the DEA, CBDT, CBIC, and the IEPFA that “already there is a lot of delay in taking action against cryptocurrency,” the lawyer asked if an RBI officer was part of the committee and if the RBI made any submissions in this matter. The central bank replied, “RBI does not have information in this regard.”
Sethi reiterated, “RBI clearly stated that it had not received any communication from any government department or given any information to any government department in this matter,” and no RBI officer helped draft this bill. He elaborated:
This comes as a surprise since RBI is a key player in investor education and protection … not even a single RBI officer is actually part of the committee that has been created for [the] drafting of this bill.
Nischal Shetty, CEO of local crypto exchange Wazirx, commended Sethi for getting an answer out of the RBI and for “busting misinformation in the crypto sector in India.” He previously told news.Bitcoin.com that traders in India were not deterred by this rumor and his exchange saw rising trading volumes. “The report did not really affect volumes at all … Unless we hear something concrete from our finance department I don’t think it’s going to affect existing traders,” he shared. Commenting on RBI’s replies, the CEO remarked:
Is the bill even real or has there just been fake news being spread?
The Questionable Minutes
The Economic Times also claims to have reviewed minutes of the interministerial meeting which states that “There is an urgent need to ban sale purchase and issuance of cryptocurrency.”
Sethi asked the central bank to confirm if said minutes were from any meetings held at the RBI or any of the offices it controls or regulates. He also wanted to know if the RBI has the right to share such minutes with the news outlet. Without confirming or denying, the bank simply answered:
It is not clear as to which minutes of the meeting is being quoted by the news article published in Economic Times.
This RTI has significantly shed some light on the rumor of the bill to ban cryptocurrencies in India. Last week, the country’s new finance secretary, Subhash Chandra Garg, reportedly confirmed that the cryptocurrency regulation is ready. He heads an interministerial panel tasked with studying all aspects of cryptocurrencies and drafting India’s crypto regulation. India will be participating in the G20 meetings this month where crypto asset regulations and standards will be heavily discussed.
Do you think this bill to ban cryptocurrencies is legitimate? Let us know in the comments section below.
Images courtesy of Shutterstock and Varun Sethi.