RBI made this argument during the ongoing case in the Supreme court of India that will judge if RBI’s decision to suspend banking support to crypto trading was constitutional or not. RBI says that it suspended banking support for crypto trading to protect financial institutions from being subjected to risks associated with the asset class.
RBI defends its decision to suspend banking support for crypto trading.
The Reserve Bank of India in 2018 circulated a notice asking all banks in the country to stop providing any service to crypto exchanges and businesses. This decision caused all exchanges to shut down or stopped providing services to local customers. The Reserve Bank of India defended its decision in the supreme court.
The success of crypto regulation in Malta and Japan used in arguments.
The lawyer of petitioners, who filed a case against RBI, alleging that the ban was unconstitutional, argued that the success of crypto regulations in countries like Malta and Japan shows that digital currencies can be regulated and innovation should be encouraged. The Indian crypto community has been fighting hard to get the blanket “ban” overturned so that people could access cryptocurrencies.