The Supreme Court on Wednesday quashed an order by the Reserve bank of India (RBI) that barred financial services firms from trading in virtual currencies or cryptocurrencies.
The ruling quashed the RBI notification of April 2018 and allowing traders and investors to deal in cryptocurrencies.
RBI had, in 2018, put out a circular declaring that banks or financial institutions should not facilitate to investors, traders or exchanges dealing in cryptocurrencies.
NS Nappinai, advocate at Nappinai & Co, said: “When we are talking about cryptocurrencies, it is always going to live in a very grey world. There is always going to be uncertainty when we speak about this specific domain product as such whichever way one wants to categorise it."
"I would definitely say that, on the one hand, it is a very well-reasoned and elaborate judgement from the Supreme Court. But, the Supreme Court judgement addressed the very small issue because that was the scope of the reference before the court which is about RBI circular which did not ban cryptocurrencies."
"That was where everybody was going wrong, all that the RBI circular said was that banks and payment systems should not encourage transactions pertaining to cryptocurrencies."
“If you really believe cryptocurrencies to be your enemy, you would want to keep your enemies closer, but then by saying that banks and payments system should not deal with it, RBI effectively moved the system away," she added.
What could have happened was as everything goes underground, but what did happen was everybody moved out of India, according to Nappinai.
So the exchanges are gone, the funds are gone, all of these people said okay this is an uncertain domain, "let us move to a place which is a lot more stable".
On that front, it is a call for the government to decide whether it really wants these systems in place, she explained.
Where the real problem arises is from the perspective of the user. The users are left with no remedy, she told CNBC-TV18.
"The user meaning the persons who purchase the cryptocurrencies. From 2013 and technically till date the government has refused to take a definitive stand with respect to cryptocurrencies.”
When asked whether now banks and financial institutions can start facilitating cryptocurrency trade, she said: “That is one immediate outcome that would happen but I am a little sceptical about whether they will indeed do that because all said and done RBI is their regulator and by saying we will evaluate they won’t be really violating the Supreme Court’s judgement. We will have to wait and watch on that.”
She further added: “The other outcome that I am anticipating is now the government is likely to take a definitive stand.”