Giving up the Goose… The Reserve Bank’s Attempt to Block Cryptocurrencies is Bound to Fail
Before the UK’s Malicious Communications Act passed into law, Parliament anguished over its reach: by all means outlaw threatening letters, but even a mild mannered bank manager can’t get the bank’s money back without threatening something so would that be illegal too? By the same token, if you’re a Bank a PPI pamphlet can look malicious but it’s often amusing or rewarding for the rest of us. And it was the same in India where the Information Technology Act meant anyone sending an e-mail causing “annoyance or inconvenience” could go to prison for three years. For those of us who find vacuous PPI advertising irritating, that might be a good thing: after all, what right thinking person could possibly object to three years in prison for the mastermind behind Gladstone Brookes?
But of course, there’s much more to it than that. What might be offensive for me may not be offensive to you, and what for you should be eagerly lapped up like ambrosia might be bile and vitriol for me. We’re all different, and in the words used by Indian Supreme Court Justice, Rohinton Nariman striking down the Indian Information Technology Act (see above) the legislation was not only “open ended, undefined and vague” but positively unconstitutional too. The Indian Government might have thought it was a good idea at the time, but the Indian Government was wrong.
And Justice Nariman was very cross again in August when the Reserve Bank of India had the misfortune to find him presiding over their long and drawn out litigation relating to the constitutionality of the 2018 Bitcoin Ban.
The slightly bizarre nature of that ban and the curious circumstances which led to its imposition last year make “open ended, undefined and vague” sound something of an understatement, but the fact is that the ban is clearly unconstitutional and just like the earlier ban on unpleasant e-mails, the Reserve Bank is about to find out why: Justice Nariman is precisely the right person to tell them.
He was indignant, livid even: accusing the higher executive of the Reserve Bank of failing to respond appropriately (or at all) to concerns raised by the cryptocurrency industry over the legitimacy of the ban and even though the Government has recently argued (tenuously) that there was never a ban in the first place, nobody is really buying that. Indeed, the Government has now distanced itself even further from its Central Bank colleagues by setting up a regulatory sandbox to pave the way for a full throated Blockchain revolution, with talk even running to the possibility of a Digital Rupee. Talk about stabbing your friend in the front…The Reserve Bank must feel like a wedding guest with a slice of albatross instead of cake.
So the stark reality is that the Reserve Bank now has just two weeks to come up with an answer to the action, and it's a safe bet that it won’t be able to do so because there is no answer. In the meantime Prime Minister Modi’s Government has gone still further in the other direction by announcing its intention of introduce a Bill to regulate the Blockchain and Bitcoin sectors in the forthcoming session, the Garg Committee has come out in favour of cryptocurrency (following Mr Garg’s slightly petulant resignation) and India at last stands ready to lead the world by taking over regulatory stewardship of this game changing sector.
Blockchain at last has its moment, and it’s about time the Reserve Bank gave up the goose…or should that be albatross.
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I doubt the Reserve Bank of India has ever truly believed in its ability to prevent use of cryptocurrencies on the subcontinent, even if it wanted to (which I don’t think it does either): but the current stark divergence between in its own position in the Supreme Court litigation with that of an increasingly Blockchain hungry Modi Government is, to say the least, striking.
There can, I think, only be one outcome and I have no doubt the final Supreme Court decision (when it comes) will unequivocally signal a combined Blockchain and Cryptocurrency revolution that will change the way we all do business in the future, and India will be at its head.