RBI Refuses to Recognize Cryptocurrencies As Valid Means
The representatives of the Reserve Bank of India (RBI) provided an affidavit to the Supreme Court and explained their position regarding Bitcoin and other cryptocurrencies, and they stressed that digital assets cannot be recognized as a means of payment within the framework of existing legislation, News18 reports.
During the court proceedings between crypto exchanges and the bank, the affidavit was filed in response to numerous petitions from businessmen engaged in the crypto sphere as they applied for a permission to operate with digital assets. The RBI cited provisions of the Monetary Policy to prove that BTC and other cryptocurrencies can’t be considered "monetary funds", "currencies", "money" or "payment instruments" since they aren’t issued by a bank, have no physical form, and there is no service provider. Also digital assets can’t be recognized as "payment systems" as they operate under the principle of a P2P network.
The RBI management stressed that the bank can use its power and authority under the Foreign Exchange Management Act (FEMA) to recognize virtual assets as valid currencies, but it is hampered by the law requirements because such assets must include a number of similar characteristics such as cheques, mail orders, or money transactions.
Legally, it is not possible to recognize digital assets as “Indian currency” since they have no physical form in comparison with Indian rupees. Specialists added that since cryptos aren’t issued by any sovereign state, they cannot be recognized as foreign currencies. Given the absence of a legal framework, the bank has no power to rule on legitimacy or unlawfulness of digital assets, the bank concluded.
As previously reported, members of a government committee established to study the system of cryptocurrencies in India postponed the final consideration of the draft law for an indefinite period.