The Reserve Bank of India (RBI) hit the headlines a few months ago through their sudden decision to cut out cryptocurrency activities within their personal and corporate customers. To keep a long story short, they decided to state that they would not provide banking or financial services to anyone who engaged within cryptocurrencies. This was met with outrage, as members of the cryptocurrency community took to the internet to produce a petition to ask the RBI to re-consider their position. Alongside this, many also attempted to take High Court proceedings out against the RBI, this did see some traction but as it stands, we are yet to hear more about this.
Once this decision was made, many did wonder about the integrity of the decision makers involved. Moreover, many questioned how much research the RBI had done, given that outside of the RBI’s financial loop, India had a strong presence within the crypto-sphere and actually seemed to be one of the few countries fostering an advancement towards cryptocurrencies and crypto adoption.
According to a new report by Quartz India, it does seem as if the RBI have now admitted that their decision was not based on adequate prior research, calling into question the entire proceeding once more.
So, according to Quartz, Delhi based lawyer, Varun Sethi filed a Right to Information Request (similar to a Freedom of Information Request in the UK) which required an instant response by the RBI.
According to Quartz, Sethi concluded that:
“It seems as if the ban was arbitrary and it came into effect without any thought from the RBI. It has either answered in the negative or given conflicting answers to our questions asking what led to this ban.”
You can see the full request, with responses as a part of the Quartz article- https://qz.com/1303363/indias-cryptocurrency-crackdown-was-backed-by-zero-research-rbi-admits/
Some of the responses by the RBI are fascinating, for example, when asked; ‘Is there any committee set up for understanding Blockchain technology and its usage by RBI especially in the banking sector?’ the RBI responded:
“RBI does not have the requisite information in this regard.”
Moreover, when asked multiple times about whether or not the RBI approached any other international central banks to review their stance on cryptocurrencies and blockchain technologies, they simply just responded “no”.
If you get chance, have a look through the full document, it’s actually quite concerning to think but at the very least, it does justify the outrage seen within the cryptocurrency community in India as a result of what now seems to be an uninformed and hasty decision.
As a result of this, we can only expect an apology or a more official statement to come from the RBI in the coming days. Moreover, with this information now in circulation, it probably won’t be long before the High Court weigh in once more.