Crypto Fight: Where the Public Loses
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India is witnessing a major dilemma in trying to answer a fundamental constitutional question, the answer to which will either empower the Reserve bank or the elected representative.
Who can ‘lawfully’ make laws for the citizens?
The obvious answer to this question is the elected representatives, as that is what democracy is all about. But, recent times have demonstrated otherwise when a Reserve bank diktat issued in the initial half of this year, prohibited banks from serving crypto businesses in India.
This development wasn’t preceded by any warning or public notice, causing several budding crypto businesses to permanently close their doors. Some of these businesses could be revolutionary with genuine and novel ideas that could help transform the current systems. However, they never got the chance to go full swing and had to bury their innovations caused by the change in the wind of financial sector. The decision that altered the start-up business scenario was taken without consulting with the public who was the major consequences bearer.
Not only did the Reserve Bank make a decision that should be a prerogative of the Indian government-the body which is chosen by the people and for the people; it was imposed as law. The recent arrest of a Bitcoin ATM owner on the grounds that he was dealing with ‘illegal currency’ speak volumes of the impact of this new imposition.
But, is the cryptocurrency illegal when the government hasn’t given out an official statement prohibiting the same? What are the implications of this entire episode and what conclusions can be drawn from it? According to me, various deep-rooted issues are highlighted when we sit and scrutinize the issuance of this decree.
- The problems of centralization can be clearly seen in Indigo ink, where the deciding authority chosen by us is not making decisions for us. Decisions are made without consulting with the participating actors i.e., the public, who are most affected by anything that is issued as the new ‘law’. Citizens have no other option but to obey these laws whether willingly or unwillingly.
- Why is the Reserve Bank assuming the role of a legislative authority when there is elected body present to perform those functions? How can a diktat issued by it be the new law when it doesn't have the authority to make any? How is cryptocurrency deemed illegal when there is no policy issued by the government declaring it the same? Till the time the Reserve Bank government doesn’t prohibit cryptocurrency, it stands as a perfectly legal store of value.
- In light of this entire incident, we can see the Reserve Bank challenging the Reserve Bank governor. The matter is in court now. Let’s imagine that after the judgment, the Reserve Bank government accepts the legality of cryptocurrency and even expresses its desire to support crypto businesses. Will the crypto businesses still thrive if the Reserve Bank continues to hold firmly to its ground and refuses to nullify the diktat? This raises major questions regarding the real authoritative power of the democratic government.
- If the Reserve Bank is bestowed with so much power, is it a possibility that it can lead us to another Financial Crisis similar or maybe bigger than the one that we witnessed in 2008? It was because of the unrestricted powers exercised by banks that the entire credit market hit the ground with a loud thud.
Can we not accept any new development in technology or science without being overly critical and cynical about it? History stands as a strong proof of the fact that people just can’t accept new trends and beliefs without brutally refuting them first. The same is happening in the case of Blockchain and Cryptocurrency.