ETHERLive
ETHERLive delivers real-time price and volume data across 16+ exchanges to users in a clear and easy-to-understand package. Users can get up-to-the-second updates for each exchange/currency pair, as well as aggregated market averages for each exchange, currency, and the market as a whole. It also provides a global converted average of all the currency pairs monitored by ETHNews, converted to USD.

---

24hr ---
--%
Thursday Jun 21st 2018
RESOURCES

The Basics

Learn the basics of Ethereum and various cryptocurrency technologies

Learn More

What is Ethereum?

Understand the underlying principles of the Ethereum Platform

Learn More

The Blockchain

Discover the revolutionizing technology known as the blockchain

Learn More
SUBMIT

Press Release

Submit a press release for consideration on ETHNews

Submit Press

Story / Dapp

Submit a story or DAPP to be considered for publication on ETHNews.

Submit Story

Explanation

Submit "Ethereum Explainer" content for consideration to be featured on ETHNews

Submit Topic
ETHNews Logo
---
--%
Home
News
Etherlive
Ether Price Analysis
Resources
Contact Us

RBI’s Admission That Cryptocurrency Ban Wasn't Based On Research Suggests Prejudice

By

Frederick

Reese

WriterETHNews.com

It was revealed that the Reserve Bank of India had no research-based justification for initiating its banking ban against cryptocurrency businesses. Was the ban influenced by prejudicial decision-making or negative press?

In April, the Reserve bank of India took a hard position on cryptocurrency, ruling that all RBI-regulated banks will no longer provide services to any individual or businesses involved with virtual currency.

"Internationally, while the regulatory response to these tokens are not uniform, it is universally felt that they can seriously undermine the AML (anti-money laundering) and FATF (Financial Action Task Force) framework, adversely impact market integrity and capital control," RBI deputy governor Bibhu Prasad Kanungo stated at a press conference on April 5. "And if they grow beyond a critical size, they can endanger financial stability as well."

This decision triggered a litany of lawsuits and brought the debate about crypto to a head in India. As it turns out, this decision may have been arbitrary. According to RBI's reply to a Right to Information (RTI) request filed by New Delhi attorney Varun Sethi, RBI admitted that no formal research went into its decision to issue the ban, no committee was formed to analyze underlying concepts, and no input was sought from other central banks or virtual currency experts from the international community. The reply was received May 9 but published June 12.

To Sethi, this revelation appears to be a damning admission of bias during a time when India is still weighing how to regulate cryptocurrency or whether it should ban it altogether.

Sethi told Quartz that he plans to file an additional RIT request and is willing to take the matter to the country's Supreme Court. "I can explain to the court that my public interest litigation is a last resort and despite several attempts the RBI failed to provide any satisfactory answers," he said. Despite uncertainty over cryptocurrency's future in India, trading volumes saw a spike last month.

Politicians and banking regulators may be responding to cryptocurrency's reputation, and not necessarily its current reality. Recent coverage of exchange hacks and other criminality in the virtual currency sphere may have influenced the popular opinion of the digital assets.

This is reflected in the recent Netflix/Vox Media collaboration "Explained," which – in one of its episodes – took on cryptocurrency. Among the contentious claims made by "Explained" are:

  • Most bitcoin is spent on illegal activities (an Australian researcher found that 44 percent of bitcoin has been used for illicit purposes, while another report shows that it is only one percent);
  • The Byzantine Generals' Problem is about being able to transact privately (it is actually about the challenges of forming a consensus in a trustless environment);
  • Satoshi Nakamoto invented the blockchain (Nakamoto invented bitcoin and popularized the term "blockchain"; blockchain is actually credited to Stuart Haber and W. Scott Stornetta 17 years before Nakamoto's paper); and
  • All cryptocurrencies use blockchain (IOTA does not have a blockchain).

In the presence of bad information and bad actors, it may be important that evangelists and knowledgeable spokesperson are available to "set the record straight."

"Many legislators appear quite easily swayed by the media," Gene Grant, CEO of VRBex, told ETHNews. "The recent Facebook hearings in the United States suggest that many senior members are completely out of touch with the way the Internet works; so we should have zero expectation that they will understand cryptocurrency. What they understand is headlines, and the recent headlines are not good."

"What the industry needs is senior statesmen to appear and to engage in intelligent conversations. We need to have leaders to which the lawmakers can relate. In the long term, the advantages and benefits of cryptocurrency will be recognized. In the short term, however, we are lacking credible sources to carry our message to combat the misperceptions."

The RBI has gone back and forth as it considers issuing its own central bank digital currency (a report on this matter by an inter-departmental group within the central bank is expected to be released later this month).


Correction: This article has been updated to provide Gene Grant's current title. 

Frederick Reese

Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.

ETHNews is committed to its Editorial Policy

Like what you read? Follow us on Twitter @ETHNews_ to receive the latest RBI, Reserve Bank of India or other Ethereum opinion news.