Even as the Reserve Bank of India (RBI)’s circular banning banks from extending banking solutions to cryptocurrency entities came into effect on July 5, Bitcoin registered a spike this week and is currently trading at $6.7K. Meanwhile, Malta and Abu Dhabi confirmed that they would be introducing legislation on cryptocurrency.
With the Supreme Court of India refusing to grant an interim stay on the RBI circular, most cryptocurrency exchanges operating in India have launched crypto-to-crypto trading services.
Meanwhile, the Gujarat Bitcoin scam just got bigger. The Indian National Congress, the opposition party at the Centre as well as in Gujarat, has now claimed in a press conference that a leader from the ruling party BJP (both in Gujarat as well as at the Centre) is involved in a Bitcoin scam worth $726 Mn.
Let’s take a look at this week’s developments!
Supreme Court Refuses To Grant Interim Relief On RBI Circular On Cryptocurrency
The Supreme Court (SC) of India refused to grant a temporary stay on the RBI’s banking restriction on cryptocurrencies.
After the SC had earlier ordered that all cryptocurrency-related cases be clubbed together and fixed July 20, 2018 as the date for the next hearing, the Internet and Mobile Association of India (IAMAI) had requested that the hearing be brought forward as the RBI’s circular dated April 6 was set to come into effect from July 5.
Accepting the request, the SC heard the matter on July 3 and refused to grant any relief to cryptocurrency entities. As a result, Banks have now stopped extending their banking solutions to all cryptocurrency-related entities.
Amid INR Roadblock, Exchanges Go Crypto-To-Crypto
Taking a cognisance of RBI circular, major cryptocurrency exchanges in the country have stopped their rupee-to-crypto exchange feature and vice versa trading facilities.
Cryptocurrency exchange Zebpay, in a notification sent to its users yesterday (July 4), stated that it has disabled the rupee deposit and withdrawal options on the Zebpay app. “This is being done in light of the bank account closures as per the RBI guideline,” it said.
While Zebpay and another exchange, WazirX, are already offering crypto-to-crypto trading, another leading exchange, Unocoin, today (July 5) launched crypto-to-crypto trading.
Commenting on how the RBI’s move will affect the Indian cryptocurrency industry, Sathvik Vishwanath, co-founder, and CEO, Unocoin Technologies, told Inc42, “The majority of the rade when it comes to cryptocurrency in India is buying or selling through INR. So this will significantly affect the trading volumes till the next steps are figured out. From what it looks like, short-term traders have opted to cash out while the long-term ones are holding the cryptocurrencies and waiting for regulations to be put in place.”
While Unocoin is also working on alternatives for cash-in and cash-out, what are the legal arguments that can be put forward by the cryptocurrency entities during the next hearing on July 20? While the Supreme Court on July 3 asked the RBI to clarify its stand on the matter further, can the exchanges really hold their ground against the RBI?
Speaking to Inc42, Prashant Phillips, partner, Lakshmikumaran & Sridharan law firm, explained the intricacies involved, “It appears that the Supreme Court shares the concerns and apprehensions of the RBI in relation to the use of cryptocurrencies. The price at which virtual currencies are transacted has been purely speculative, which, in the absence of any regulations or guidelines, exposes investors and the general public to huge financial risks.”
He added that the RBI circular attempted to provide a preliminary safeguard till some legislation is brought in place in this regard. The circular falls in line with the Finance Minister’s statement who earlier said that cryptocurrency in any form is not legal tender. The court’s decision to not impose a stay on the notification should be viewed as only precautionary. The next hearing is on July 20 where the Supreme Court will rely on the submissions of both sides before passing any order in this regard.
Congress Accuses BJP Of $726 Mn Mega Bitcoin Scam In Gujarat
Even as the investigation into the $300 Mn Amit Bhardwaj Bitcoin scam is still in progress, another alleged Bitcoin fraud worth $726 Mn (INR 5,000 Cr) has come to the fore.
Addressing media persons, Congress spokesperson Shaktisinh Gohil recently claimed, “A Bitcoin scam of more than $726 Mn (INR 5,000 Cr) has surfaced in Gujarat with some media reports pegging the figure at $12.7 Bn (INR 88,000 Cr).”
The Congress has demanded a Supreme Court-monitored judicial probe into the matter and has accused the ruling political BJP of the fraud.
Earlier this year, in a Bitcoin extortion case, a superintendent of police and other policemen were suspended for their involvement extorting more than 2,000 Bitcoins from a Surat-based retailer. The case was investigated by the Ahmedabad CID.
“There were reports of the state police blackmailing some businessmen in Surat for extortion and they named a former BJP legislator as one of the kingpins,” said Gohil.
Koinex And Coindelta Launch P2P Transaction
In line with Zebpay, Unocoin and other exchanges, Pune based cryptocurrencies exchange, Coindelta has also announced the launch of Flux, a peer-to-peer platform to trade bitcoin and other cryptocurrencies.
As per the statement shared with Inc42, Flux is a P2P network which will allow people to trade Bitcoin, Ethereum, Ripple, and USDT. USDT is a stable cryptocurrency the price of which is pegged at $1. Flux and Coindelta will be integrated with each other seamlessly. Flux will go live on July 15.
Another exchange Koinex has also announced the launch of Loop, a P2P token transaction network. The network will allow traders to legitimately continue to trade their tokens in the light of the current uncertainties in the market.
Abu Dhabi Launches Cryptocurrency Regulatory Framework
While there is still no clarity over cryptocurrency regulatory frameworks in India, Abu Dhabi Global Market (ADGM), the International Financial Centre in Abu Dhabi, has launched its framework to regulate spot crypto asset activities, including those undertaken by exchanges, custodians and other intermediaries in ADGM.
As per the press statement, the framework is designed to address the full range of risks associated with crypto asset activities, including risks relating to money laundering and financial crime, consumer protection, technology governance, custody, and exchange operations.
Richard Teng, Chief Executive Officer, FSRA of ADGM, said: “We are encouraged by the significant global and regional interest from exchanges, custodians, intermediaries and other institutions to our crypto spot regulatory framework. Globally, responsible crypto asset players are seeking a regulatory regime upholding high standards that foster market confidence.”
He added, “By introducing a comprehensive and best-in-class regulatory framework, the FSRA is taking a leading role in instilling proper governance, oversight, and transparency over crypto asset activities, positioning ADGM as a destination of choice for crypto asset players. Our engagement with fellow global regulators also validated our position that the key risks highlighted have to be addressed for crypto assets to be more widely accepted and institutionalised.”
While Dubai has already announced the launch of its own fiat cryptocurrency, another country Malta has now reportedly confirmed that it will enact on the three cryptocurrency bills in its parliament.
Malta’s prime minister Joseph Muscat has confirmed the parliament will favour and approve three cryptocurrency bills designed to embrace the blockchain sector.
In other news, a report claims that cryptocurrency investors are giving up on Bitcoin, and cashing out of Coinbase, exchange.
As per the report, deposits to Coinbase outweighed redemptions in May, but it was only by a 10% margin—putting in $1.10 for every dollar withdrawn.