India: A Historic Crypto Ruling
March 4, 2020
India’s Supreme Court today announced a historic ruling: they overturned The Reserve Bank of India’s 2018 circular that effectively banned cryptocurrency trading, making it illegal for crypto exchanges to link to bank accounts. The Court has now ruled that circular as “unconstitutional”. This has re-opened up the world’s largest democracy, steeped in thousands-year old entrepreneurial culture, to the crypto sector. Just hours before the ruling, I flew back from a week in India meeting with entrepreneurs in the sector – it was apparent over the last week that innovators continued to innovate under adverse conditions, and those that had a mission to provide broader financial access to the world’s (soon to be) largest and youngest population were not dissuaded from building solutions to reach the masses.
In November 2016 I was in India when the government announced their demonetisation scheme – taking large bank notes out of circulation suddenly in an effort to move weed out “black market” cash (and, in my longstanding view, to force more transactions to a mobile/digital format so that they could be more easily tracked). The price of Bitcoin on Indian exchanges instantly traded at premiums to other exchanges, with record volumes. People from all socioeconomic levels saw that the government could deem their hard-earned cash illegal literally overnight, a case study on why a decentralized digital currency like Bitcoin matters. Future\Perfect Venture invested in one of the first Indian cryptocurrency exchanges, Unocoin, that year.
While fintech flourished and the numbers of the unbanked decreased thanks to many government initiatives over the ensuing years, the Reserve Bank of India followed China’s ban on crypto as it threatened their control over monetary policy. Unocoin led a legal challenge to the RBI circular, joined by Wazir (recently acquired buy Binance) and other companies in the space. It’s been a tough couple of years for these entrepreneurs – they should all tell their own stories – but they persevered in bringing financial freedom to their 1B+ fellow citizens. In the end the court ruled that this was a constitutional right, and we should all be thankful that they fought for this right.