A landmark Supreme Court ruling has reignited India's crypto ecosystem, reversing a two-year banking ban imposed by the Reserve Bank of India (RBI). With trading volumes skyrocketing overnight, stakeholders are cautiously optimistic about the sector's future.
The RBI Ban and Its Fallout
In April 2018, the RBI severed ties between cryptocurrencies and traditional finance by prohibiting banks from servicing crypto businesses. The move devastated local exchanges:
- Exchange closures: Koinex, Coindelta, and Zebpay shuttered operations due to collapsed liquidity.
- Stunted growth: Koinex’s monthly trading volume plummeted from $265M (Dec 2017) to <$25M before closing.
- Price premiums: Indian Bitcoin prices often traded 5%–30% above global averages.
"Operating a crypto exchange became impossible without banking support," lamented Koinex co-founder Rahul Raj in 2019.
Supreme Court Overturns RBI Ban
On March 4, 2020, India’s Supreme Court declared the RBI circular unconstitutional, citing:
- Lack of evidence showing crypto harmed financial institutions.
- Overreach in policy without empirical justification.
Immediate market impact:
- WazirX’s 24-hour trading volume surged 600% to $5.33M.
- Zebpay saw a 200%+ increase in transactions.
- Exchanges like CoinDCX rapidly integrated INR gateways.
👉 How India’s Crypto Revival Compares Globally
Challenges and Uncertainties Remain
Government Resistance:
- A pending draft bill proposes a complete ban on crypto activities, with penalties up to 10 years imprisonment.
- Finance Ministry officials are reviewing the court verdict for "next steps."
Adoption Barriers:
- INR trading pairs still account for <1% of volumes post-ban lift.
- Regulatory ambiguity deters institutional participation.
FAQs: India’s Crypto Revival
Q: Will global investors flock to Indian exchanges?
A: Not immediately—most trading remains crypto-to-crypto. INR liquidity must rebuild.
Q: Could the government still ban cryptocurrencies?
A: Yes. The 2019 draft bill could resurface, though political will remains unclear.
Q: Why did the court side with crypto businesses?
A: RBI failed to prove harm; the ruling emphasizes evidence-based policymaking.
The Road Ahead
While optimism abounds, India’s crypto future hinges on:
- Clarity from lawmakers.
- Banking system cooperation.
- Sustained retail/institutional demand.
Analysts caution: A $1B+ market inflow requires stable regulations and infrastructure.
👉 Exploring Crypto’s Next Growth Frontier
Disclaimer: This content is for informational purposes only. It does not constitute financial advice.
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