It was a landmark day for the cryptocurrency ecosystem in India as the Supreme Court lifted curbs on cryptocurrency imposed by the Reserve Bank of India (RBI) in April last year. With the apex court order, cryptocurrency will now be a legal entity in India, enabling legitimate transactions in the country.
Industry experts welcomed the court order and saw it as a positive development, opening doors for further development of cryptocurrencies in India. The ecosystem includes cryptocurrency, virtual currency and bitcoins.
“From an emerging technology development perspective, it is a good move for the developer ecosystem who can deliver different solutions on blockchain tokenisation and smart contract projects. The upliftment of the ban also opens up the market for crypto development platforms. The central bank had never banned cryptocurrencies; they had rather just ring fenced the financial system to align with FEMA and FERA regulations and that’s their remit,” remarked Sudin Baraokar, global IT and innovation adviser. He feels that although the curbs have been lifted, it will be a while before the overall ecosystem gets a lift.
“There are many challenges in the ecosystem as it is difficult to get skilled specialists in blockchain technology and integration specialists to help deploy these in an enterprise. Besides this, the blockchain developer community ecosystem needs to be developed further so that India can become a world leader in blockchain and fintech-based technologies. I feel that all the next generation fintech technology will be developed using blockchain and other emerging technologies,” added Baraokar.
In addition, the removal of curbs will enable legitimate transactions in cryptocurrency. “While the illegitimate transactions in cryptocurrency has been an area of concern, a far extent of such transactions will have some usage in the banking system, making it easy for the government to trace actual illegitimate usage. Furthermore, the speculative aspect of cryptocurrency will open up market for sophisticated investors,” Alok Shende of Mumbai-based Ascentius Consulting told THE WEEK.
He further opined that unlike other digital payment options, cryptocurrency is a different class of payment option. “The implication both from the perspective of the payment such as new coin issuance as well as regulatory framework is still evolving. While the SC has lifted the ban, there is a likelihood that the government may like to regulate cryptocurrencies. What form and shape this regulation is likely to evolve remains a risk factor for the market participants,” added Shende.
Legal experts said it was a significant order as the world is moving towards a universal currency. “Presently, it is too early to imagine that cryptocurrency will replace the money that we are familiar with, but it is the currency of the future. Just like how investors are now buying gold-backed securities instead of actual gold, cryptocurrencies have become an asset class of their own in other parts of the world. This move will spur innovation,” said Krupesh Bhat, founder, LegalDesk.com
L. Viswanathan, Partner at Cyril Amarchand Mangaldas, said the Supreme Court’s ruling was to be watched with interest. "RBI’s regulatory powers are wide and with the benefit of the Supreme Court’s judgment, it is expected that RBI will reconsider its approach to cryptocurrency and come up with a new, calibrated framework or regulation that deals with the reality of these technological advancements (given that even central banks across the world are issuing their own cryptocurrencies) and simultaneously, balancing considerations of regulatory, consumer protection, security and monetary control that the RBI is expected to have over currency and financial products. This might also catalyse the potential for the use of blockchain in diverse areas.”
Many experts feel that being seen as a currency of the future, cryptocurrency has a great potential for innovation. “Cryptocurrency is the alternate cash of the future. It is secure and insulated in so many ways in an era of turmoil. In this day and age of uncertainty, as seen with the COVID-19 pandemic, cryptocurrencies are good hedges. This SC ruling breaks the path for the currency of the cosmos of the future,” remarked brand expert Harish Bijoor.