We had the honour to interview Mr. Ashim Sood, one of the leading lawyers who took the case the crypto Ban in India in his hands and won the case.
Interview Date :12th March 2020
Mantra should be ”Regulate, don’t Prohibit”
There is a mix of history to that. In November 2017, the Indian government constituted a committee to look at the precise issues with crypto and the possibility of regulation it. That committee had representatives from high level governments and from ministries from the ministries of finance as well as the Reserve bank of India and the Securities Exchange Commission, and also the main Taxation Authority in India. Around February or March of 2018, the Ministry of Finance was very clear that cryptocurrency should not be banned. They came up with a note that said “We are a country that innovates in technology. Thus, rather than banning it we should try to regulate it” to make sure that nothing bad happens to the people who are using it, and that the ill-effects of crypto should be mitigated. But for some reason 1 month later the Reserve Bank which was a member of that committee brought this ban.
Furthermore, in February of last year 2019 that very committee submitted a report to the government in which it recommended a prohibition on cryptocurrency. Now, that committee report hasn’t been taken forward by government in the sense that there has been no bill brought to the parliament. So, there are 2 ways of looking at that; one is that the government still hasn’t decided, the other one is that because the Reserve Bank of India had effectively banned cryptocurrency, the government didn’t need to decide. Now that the ban has been uplifted, the government will certainly have to take a decision on which way to go. We had been telling the court that the mantra should be ”regulate, don’t prohibit” Prohibition is the most extreme measure in law. This is a very nascent technology with possibilities we don’t understand. Certainly there are risks associated with it, but there are some bad things that happen with every technology, and not even just technology but also with every economic activity; banks get robbed or hacked by online hackers. If you regulate this properly you will mitigate most of the risks that are attached to cryptocurrency. So hopefully the government will see that point of view positively. If another ban comes, we will study it and gear up to challenge that also if it is feasible.
Don’t treat Crypto as an Untouchable Commodity
At the Supreme Court, we actually cited that Malta has a very comprehensive law on setting up crypto exchanges and ICOs etc. Two other laws which we cited at the supreme court were the New York Law and the Wisconsin Law. Apart from this we showed that most democratic and free countries have a regulatory and not a prohibitory approach to cryptocurrency. We explained to the court that ”We are not saying that you should copy these laws, but we are just showing you that countries around the world don’t treat cryptocurrency as an untouchable or pernicious commodity, they treat it as something that you deal with as a normal economic activity”. The other thing in our case is that we showed numerous instances of banks being hacked, even apart from fiat hacks or fiat frauds. We showed the court instances of volatility in the stock markets; there are some stocks which are total scams even when they appear not to be scams. The stock market has fallen all around the world due the COVID-19 pandemic, and so has shown that there is volatility in the stock market as well. There is fraud around the world when it comes to banks, and many scammers around the world are sending people emails, and hack their bank accounts every day. However, the possibility of fraud is not a reason to ban the commodity itself. It is a reason to stop that fraud from taking place. But this was the first time that because of fraud, you ban the commodity rather than making sure that the fraud does not occur. So that’s something that I think even the court found a little hard to digest.
“we won’t reconsider it”
At least exchanges are transparent: they typically want to try and be as law abiding as possible; they keep information about all the trade that is done on their platforms, this information helps de-anonymize a lot of transactions. Hence, the moments you say that these exchanges cannot trade, where most cryptocurrency trades usually take place, you are actually losing a valuable opportunity to monitor law and enforcement issues, consumer issues, speculative issues etc. The court was very open minded, and they heard us for many days in August last year. I think because the court possibly wanted to give the Reserve Bank some deference, they asked the Reserve Bank to reconsider their decision. The Reserve Bank took two month to do so, but came back and said “we won’t change our decision”.
Then the Court heard us again in January for 12 days over a period of about three weeks and they gave us a very patient hearing. I argued the case for about 12 hours out of 18. Finally, we heard our decision about the uplift of the ban about 1 and half month later. It felt really good. We have a very strong cryptocurrency community here in India and people have been following and watching this decision very keenly.
It was satisfying for me as a lawyer also. The court complimented me in the judgment for my arguments, which is very rare, and a great honor for lawyers. It said in the last paragraph of the judgment: “Before drawing the curtains down, we are bound to record, as in every artistic display, our appreciation for the skillful manner in which Shri Ashim Sood, learned Counsel, led the attack on the impugned Circular, but for which, the climax could not have had a nail biting finish.” Only a lawyer will understand that to hear something from the Supreme Court is even more meaningful than winning the case.
There were a lot of people in India following the case, from the industry, and common people who believed in cryptocurrency. The arguments were being live tweeted and I was getting a lot of messages during the case – some people even wanted to send me bitcoin to thank me. After we won, the outpour of joy was very heartwarming, and I felt proud to have fought for this entire community.
Interviewer , Editor : Lina Kamada
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