RBI’s Counsel Calls Bitcoin a Ponzi Scheme in Court

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The Reserve Bank of India’s (RBI) legal counsel projected bitcoin as a Ponzi scheme before the country’s apex court.

Shyam Dewan, the advocate representing the central bank, told the Supreme Court of India that cryptocurrencies are price bubbles. He further argued that RBI acted in the best interest of investors when it decided to impose a banking ban on cryptocurrency exchanges, the firms which facilitated the selling, purchasing and holding of bitcoin and similar digital assets.

“Bitcoin and Crypto are ponzi schemes, price bubble and huge environmental disaster,” said Dewan. “For example, consumption of electricity in mining is even more than the total electricity consumed in Switzerland per year.”

The comments surfaced in the wake of an ongoing courtroom battle between the RBI and the Internet & Mobile Association of India (IMAI). RBI in April last year barred banks from doing business with cryptocurrency exchanges. IMAI later filed a case against RBI, questioning its constitutional authority over a nascent crypto industry. The case dragged on for more than a year and remained without a conclusion. In the meantime, an interministerial committee setup by the former Indian finance minister Arun Jaitley recommended a complete ban on cryptocurrency activities in India.

Bitcoin is not illegal in India, nevertheless. The government’s proposal still has to undergo a rigorous parliamentary procedure before it becomes a law. And IMAI is doing its best to change the RBI’s original judgment while attempting to prove that both the central bank and Narendra Modi government are being biased towards the emerging bitcoin industry.

Backward Approach

The hearing held before the Supreme Court of India today also attempted to show how RBI’s decision was regressive when compared to other regulators. IMAI’s legal counsel Ashim Sood explained to the judge that countries like the US, Japan, and all the G20 nations are looking to regulate bitcoin. But RBI chose to ban it even though they could govern it like they govern any other speculative asset.

At one point in the hearing, even the judge questioned RBI’s move, stating that if regulators can oversee stock markets, which also carry investment risks and volatility, then what stops them from doing the same to cryptocurrencies.

Nevertheless, Dewan remained adamant about the negative traits of bitcoin. He argued about cryptocurrency exchanges operating without obtaining a regulatory license, the growing number of hacking incidents, and issues related to consumer protection.

The matter will be heard tomorrow.

News Source: Crypto Kanoon

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