Even the lobby that challenged the RBI in the Supreme Court, the Internet and Mobile Association of India (IAMAI), shunned dealing with crypto businesses and dismantled its Blockchain and Crypto Assets Council in July 2022. But the RBI is still carrying the burden of the 2020 judgement even when it can take fresh action against crypto in the light of new developments.

What exactly did SC Rule in RBI Vs IAMAI?

For the uninitiated and even the legalese-challenged, the Supreme Court did not rule that crypto businesses should be allowed in India. The Supreme Court merely set aside a 6th April 2018 circular issued by the RBI that barred entities regulated by the RBI from dealing with any person, business or individual, dealing with crypto-currencies. In effect, the Supreme Court made that particular circular ineffective.

Does that mean that the RBI cannot issue the same kind of circular in future? The SC judgement does not remark anything regarding any future course of action by the RBI. This means that Shaktikanta Das has more power over the crypto businesses in India than has been exercised.

Govt — the biggest tacit champion of crypto in India

In a perverse manner, the 30% tax on income from crypto and related assets like NFTs etc., has given recognition to crypto businesses. The government seems to regard crypto transactions in the same manner as alcohol consumption. It is considered bad for the consumers, but it is good for business and tax revenue.

The government’s equivocal stance on crypto has the Directorate of Enforcement dealing with multiple cases of money laundering and abetment to suicide on one end, and the Income Tax Department raking in the moolah on the other.

The government, which is bringing regulation for all sorts of digital activities, including WhatsApp forwards and posts on Twitter, is silent when it comes to the issue of crypto in India.

With 30% taxation, the government hopes to collect revenues from Indians, who have already lost money in the 2022 global crypto-bubble-burst.

However, the legislature does not realise that probably many times the amount of anticipated tax revenue has been lost through money laundering via crypto exchanges.