KoinX Profile picture
Aug 20, 2019 75 tweets 9 min read Read on X
#Crypto v.#RBI

Matter is listed in Court no. 5 as item 1 today. Court has resumed.

Crypto case hearing has started.

Mr. Ashim Sood started his arguments.
Mr. Sood is arguing that the action of RBI is against the doctrine of proportionality beside being based on no study whatsoever.
Mr. Sood now explaining the law formulated by Wyoming (USA) to regulate Crypto assets and custodial services (Exchanges).
Discussing the disclosure policy, anti-money laundering policy and KYC policy which is applicable to the industry in Wyoming.
Licensing requirement in NY statute is being explained.

SEC guidelines on Howey's test is being explained now on what is security token and what not.
Directive of European parliament is being discussed.

Favourable regulatory guidelines of G20 countries explained and pointed out that most of the countries in g20 nations are inclined to regulate Crypto and are not treating industry players as bunch of criminals.
That does not mean that Crypto cannot be used for Criminal activities. In fact most of the nations have included the preventive provisions to deal with that.
FAFT guidelines are being discussed and how it guides to suppress the illicit side of Crypto assets.
Pursuant to FAFT guidelines, Financial conduct authority has issued a regulation for crypto assets.
UK is one example which had the same risks as recognized by India.

Regulators there exercised their powers intelligently and they studied the technology.

UK realized that you cant prevent anybody to manage their affairs dealing with Crypto.

Whereas RBI has not applied mind.
Documents of G20 meeting 2019 is being read.
Argues that My Lord, on one side we have UK USA etc. and on other we have China Saudi and Indonesia. It may not matter which side we fall. But there is no sense that something should be banned because it involves risks.
RBI circular does not reveal any purpose. Various docs of RBI shows no study is conducted.

Various reports of RBI being read which discussed Crypto.
RBI mentions in one of its doc that effect of the Crypto on economy is negligible.
RBI showed concern about market integrity in April 5 Circular. However which failed to explained which market and how its integrity is at risk.
Argues that since there has been no application of mind by RBI, the decision fails in the test of proportionality.
RBI purportedly took action in consumer protection, anti money laundering, terrorists financing etc. However in one of its doc (post circular), RBI realized that it pushed the transparent exchanges to dark port, people are resorting to peer to peer using cash.
It later realized that it has not achieved anything by cutting off banking channel.
Major concerns of are consumer protection, volatility, exposure of traders to financial and legal risks and usage of bitcoin and Crypto in illicit activities.
Mr. Sood argues that India has Consumer protection laws in existence which can be specifically made applicable to Crypto and special provisions can be formulated to deal with peculiar situations
Anti Money laundering law of India is a comprehensive law which provides for disclosures, maintenance of records etc. It can be made applicable on Crypto as well.
Video on Money Laundering:
RBI circular is void on the ground of vagueness. It gives no definition of Crypto and seeks to crack down on all indiscriminately.

A judgement is being read which holds that vagueness of rule is detrimental to its validity.
1970 1 SCC 248

Judgement on Article 19 1g is being read.

If restriction on business is so stringent that it cannot be carried out then it is an unreasonable restriction.
Another judgment is being read.

If restricted is such that it though does not prohibit the business but has the effect of doing so, it is an unreasonable restriction.
1969 1 SCC 853

1950 SCR 759

When a statute under the guise of protecting public interest, put restrictions on individual business, it is arbitrary and unreasonable.
Parliamentary debate is being referred to where minister has answered the questions on crypto after banking ban.

points out that only IMC report is there which has not yet reached the parliament. So getting influence by that it not warranted.

Judgment - 2004 10 SCC 1
Conclusively argues that RBI has acted under 35A and 36 in the manner which was not contemplated under law.

Mr. Ashim Sood completes his arguments.
Mr. Nakul Dewan, Ld. Senior Advocate has started his arguments now. He is representing the Exchanges' Petition i.e., Rajdeep Singh & Ors. v. RBI
Mr. Dewan arguing on interaction between Virtual currencies and Fiat currency. what is legal characteristics of Virtual currencies.

He is briefing the court on how the use of money evolved in the worlds from barter to gold to fiat.
The period which gave rise to VC's is 2008 financial crises.
When US objected India Iran deal of fuel. India had the option to take fuel in exchange of fuel. which is purely a peer to peer transaction.
6 concerns of RBI:

1. No authorization to Crypto business (No law prescribes authorization),

2. Hacking (So is with the Digital banking)

3. consumer protection issues (Consumer protection laws can deal with it)
4. No inherent value (Even fiat is not backed by anything as a matter of fact)

5. Volatility (Stocks also have that)

6. use in Illicit activities (Laws like KYC AML etc. can be made applicable)
Different types of Crypto currencies are being explained. Utility token (Unidirectional) has been explained with an example of shopping points and Airlines miles.
Advantages of blockchain technology is being explained in the banking and financial sectors.
Inter Ministerial Committee's report is being read out.
The judge says that this report seems to guide only on the aspect how the technology can be used by Intra/ inter bank transfers. And not Crypto.

Counsel says not just that My Lords, it also provides for Official digital currency.
The court will reassemble post lunch.

Stay tuned.
The court resumed.
If Crypto is not socially prevalent currency, then certainly it is not money. it is just medium of exchange for consenting individuals.
Now if Crypto is not money. Then it should be considered as a monetary asset which the people may choose to convert to fiat currency. People must have right to use it in barter.
The money deposited in the bank is not RBI's money or bank's own money. in fact it is my money.
A US judgment is being referred to on the explanation of money. What is money and what is not.
Crypto is not money but it is an intangible property.
If crypto had impact on monetary stability of the country, Govt. could have proceeded but in their November 2017 they have accepted by it has little popularity among general public.
Since it is not money, it is outside the purview of the monetary policy.
the counsel has submitted a detailed chart across the board which mentions all notifications of RBI. What is notable is that there is no change of circumstance from 2013 to 2019. Then what made the RBI to change its stance on crypto. change of stance is unsubstanciated.
Representation was made to RBI by industry players in pursuance of this Hon'ble Court's order. However RBI did not respond to that except saying that we have forwarded the representation to the IMC.
Counsel apprises the court that exchanges had even offered to provide dash board to all the relevant authorities citing real time data so that they can understand the technology and business.
Counsel is citing self regulatory measures already implemented by the crypto business in India.
investors know about the volatility in Crypto prices and they choose to invest in that. They must be allowed to do that in their right.
Judge replies positively that what you are saying is when you can make a regulatory framework to regulate it then why to ban. Similar to regulatory framework for stocks which is not banned.
Counsel refers to Annexure R2 filed by RBI - 2018 annual report.
RBI recognized that development in crypto industry need to be monitored as after banking ban there is risk of shift to dark web, tax evasion, aml, cft violations. So when the RBI has knowledge about its effect then why not to put it under the framework so as to make it compliant.
Bank is only a custodian of the deposited money and not the owner. A bank acc holder cannot be restricted to have access his own money unless the restriction is sanctioned by a legislation.

Judgment - Bhavesh Parekh read out.
RBI has resorted to unreasonable classification when it considered that only bidirectional Crypto (Convertible to fiat in which people trade) crypto have interaction with banking channel and not unidirectional (Non convertible) like frequent flyers points

which in fact can be converted into fiat as people can offer to buy that with fiat and avail that from the airlines. So it is violative of Right to equality Article 14.
Discussion of Singapore Parliament is being referred to in which deputy PM of Singapore had responded certain questions.
Counsel says Mr. Lords Singapore is a developed economy which has taken into consideration all pros and cons and applying measures to regulate it instead of banning.
Counsel conclusively says that there is no prohibition on Crypto except RBI banking ban and the same must be struck down.
Counsel closes his argument by arguing one application for release of money of exchanges lying in bank and banks frozen that even within the 3 months exit period.
Mr. Shyam Diwan, Ld. Sr. Advocate started his arguments in favour of RBI.
Crypto is a privately issued digital means of payments. It has direct impact on monetary and payment system. And RBI has issued notifications to discourage this but when it did not work, RBI took this action.
Crypto has some monetary characteristics and its value is driven by people's consensus.
If more and more people continue to adopt them as means of payment then it might compromise our monetary system badly. It also has an ability of cross border transactions. That is where the problem lies.
Counsel is reading out a list of events which transpired over a period of time including actions taken by RBI and policy evolvement by Ministry of Finance.
The biggest concern for RBI has been using Crypto as means of payment besides its use in illicit activities.
Counsel says that the first committee appointed by the Govt i.e., Inter disciplinary Committee has studied the subject and applied its mind.
Budget speech of Mr. Jaitley is being read.
Yes for Blockchain but Cryptos must not be a part of the payment system. - Mr. Jaitley
It is evident from the language of the RBI circular 6 April, which seeks to address associated risks of Crypto currencies, so by that time the evaluation and assessment of pros and cons were done by the Govt.
various incidents of hacking of exchanges worldwide are being cited to the Court including the infamous hack of @Coinsecure exchange.
Bitcoin and Crypto is a ponzi schemes, price bubble and huge environmental disaster - for example consumption of electricity in mining is even more than the total electricity consumed in Switzerland per year.
Hearing ends here.

Arguments will resume tomorrow by RBI and the same will be followed by Rejoinder by the Petitioners.

Thank you!

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with KoinX

KoinX Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @getkoinx

Feb 15
Breaking🚨- Assam Implements National Generic Document Registration System (NGDRS) and introducing #Blockchain technology for land records.

A major leap towards modern governance & citizen services.

Here’s a detailed 🧵 Image
1/ Announced by Nidhi Khare, Secretary, Dept. of Land Resources, and Syedain Abbasi, Special Chief Secy of Assam, this initiative aims to revolutionize how land transactions are recorded and managed.
2/ NGDRS, part of the One Nation One Software initiative, is now live across all 77 Sub-Registrar Offices in Assam. This system streamlines registration processes, making them more efficient and user-friendly.
Read 11 tweets
Dec 29, 2023
🚨Important Announcement from KoinX🚨

We recently noticed a rise in Income tax queries on matters related to crypto transactions.

Have received High-Value Transactions notice?

Here’s a detailed thread on how to handle such notice🧵👇 Image
1/ Paying income tax is a legal obligation for all taxpayers, individuals, or businesses.

The Income Tax Department employs various analytical techniques to track non-filers or those underreporting income.

This includes collaborating with banks and government departments to identify high-value transactions.
High-Value Transactions: What Are They?

High-value transactions involve significant sums reported by banks and government agencies to the Income Tax Department. These transactions trigger scrutiny, and taxpayers may receive notices if their spending exceeds permissible limits. Examples include:

•⁠ ⁠Cash deposits/withdrawals exceeding Rs. 10 lakh in a savings account.

•⁠ ⁠Cash deposits/withdrawals exceeding Rs. 50 lakh in a current account.

•⁠ ⁠Fixed deposit cash deposits over Rs. 10 lakh.

•⁠ ⁠Real estate transactions exceeding Rs. 30 lakh.

•⁠ ⁠Cash investments over Rs. 10 lakh in stocks, mutual funds, #crypto etc.

•⁠ ⁠Cash payments over Rs. 1 lakh for credit card bills.

•⁠ ⁠Sale of foreign currency over Rs. 10 lakh.

•⁠ ⁠Other high-value spending like business-class air travel, tuition payments, jewelry purchases, etc
Read 13 tweets
Mar 27, 2023
Breaking🚨: The G7, the world’s seven biggest democracies, is planning to promote tougher regulations for the crypto industry🤯

We are already witnessing the regulatory effects on crypto post-G20 India🇮🇳 finance meeting.

What happens next will have a huge impact on crypto🧵
The Group of 7 summit is an international forum held annually for the leaders of the G7 member States of :

France 🇫🇷
United States 🇺🇸
United Kingdom 🇬🇧
Germany 🇩🇪
Italy 🇮🇹
Canada 🇨🇦
The major goal of the plan is to:

⚡️Increase crypto transparency
⚡️Enchance customer protection
⚡️Address potential risks to the global financial system.
Read 10 tweets
Mar 26, 2023
Breaking🚨: The Finance Minister of India🇮🇳 Nirmala Sitharaman calls on an urgent meeting with MDs & CEO’s of public sector banks 👀

Here’s everything you need to know🧵
Finance Minister on Saturday chaired a meeting to review the preparedness of public sector banks on the back of the stress in the banking systems in the US & Europe after the recent collapse of Silicon Valley Bank and Credit Suisse triggered contagion fears.
The ministry said the PSBs were reviewed on various financial health parameters and the resilience of PSBs in the current volatile environment.
Read 9 tweets
Mar 24, 2023
Important🚨: The Arbitrum airdrop is here.

Got any Arbitrum? Did you know that Airdrops are a taxable event in India🇮🇳

Here’s everything you need to know🧵(scroll trough for an exclusive offer👀) Image
What are Airdrops?
Airdrops are free distribution of tokens by crypto projects to their community. It is a way of promoting the project or rewarding early users.

Airdrops can be received by performing various tasks, using the Dapp or simply by holding some crypto :)
Taxation of Airdrop Income?
Airdrops may be considered to be Gifts for tax purposes.

Gifts up to Rs.50,000 in a year is not taxable.
If Gifts are more than Rs.50,000 in a year, then it is fully taxable.

Disclose in ITR under heading "Other Income".
Read 7 tweets
Feb 15, 2023
The Government of India🇮🇳 recently introduced a set of penalties for not filing or reporting #cryptocurrency TDS.

That includes jail term & penalty equal to unpaid TDS.

Here are 5 ways in which you can avoid penalties🧵
1) Accurate Book Keeping

- If you are trading on Indian Exchnages you don't need to worry about TDS

- If you are trading on International Exchnages you need to do record all your crypto transations including P2P.
2) Report all your Transations

If you are trading on Indian exchnage, International exchnage or doing Mining, P2P, NFT trading, Airdrops & hardforks etc

You need to report & be very transparent about your #cryptocurrency transactions.
Read 7 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!