For almost a decade, Bitcoin has been on the fringes of global financial markets. However, in 2017 and beyond, cryptocurrencies are becoming more widely accepted and used worldwide even to the point of being used alongside local currencies, even though they are mostly not regulated by local governments. Can the government of a country such as India still do the unthinkable - ban Bitcoin?
Bitcoin and the Supreme Court in India
Three judges issued a communication to the tax department, the market regulator, the central bank, and several other authorities asking them to respond to a petition on this matter. This was reported by a national newspaper, The Hindu.
The wait-and-see attitude of India should soon come to an end. At least that's what attorney Dwaipayan Bhowmick calls for in an appeal to the leadership of the world's second most populated country.
The Supreme Court of India (SC) has responded and referred the concerns of its citizens to the government. Specifically, the constitutional judges accordingly called for the Reserve Bank of India, the Ministries of Information and Technology, Law and Justice, Finance and the Securities and Exchange Board of India to respond to the petition to provide clarification on the legality of using Bitcoin in India.
The SC is the highest court in the country, being at the same time the federal court, constitutional court and highest court of appeal against the decisions of the high courts of the states. As an intermediary between the states, the court has the role of a central point of contact for petitions, complaints, and solicitation in serious matters, in addition to the enforcement of fundamental rights.
India takes a patient stance when it comes to cryptocurrencies and their role in the world's largest democracy. Concrete steps to regulate are still pending. In April, the government established a committee that examined cryptocurrencies and proposed new regulations.
Although Bitcoin is of great importance in India, the government of the billion-dollar state has so far refrained from intervening in the booming cryptocurrency market. For example, the petition refers to the estimated 500,000 bitcoin owners and the skyrocketing exchange rate with the rupee.
With Bitcoin being so popular in India, it comes as no surprise that the rest of the world is eager to see what happens as a result of the petition. Could this lead to a greater adoption of the Bitcoin such as that already being experienced in other countries, where goods and services can be bought with Bitcoin and can Bitcoin gambling take off in India in the same way?
The original petition to the court raised fears that Bitcoin cross-border transactions could be carried out without a trace and making it as an attractive tool for tax evaders, cybercriminals and terrorists. The petition also states that bitcoin exchanges in India register around 2,500 new users every day and that about 500,000 Indian residents now own Bitcoin.
As a result of its growing acceptance, Bitcoin usage may affect the "market value of other goods". Consequently, the court asked for an "urgent instruction" for the government to regulate Bitcoin. The petition pointed out that several countries in the past began to regulate Bitcoin or ban it. For example, Russia's attempts to block Bitcoin and China's crackdown on exchanges sites have been cited in the petition.
If India decides to introduce regulatory measures could this have a knock-on effect in the region? For example, numerous countries have already been testing crypto-regulatory measures such as China, Russia, Singapore and South Korea. Should India opt for regulation of the Bitcoin which could lead to a huge bitcoin adoption in India? With 1.3 billion people entering the market and thus creating high demand, the effects on the Bitcoin price could be significant.