Supreme Court allows trading in cryptocurrency, cancels 2018 ban imposed by Reserve Bank of India RBI
In April 5, 2018, RBI issued a press release stating that virtual currencies (VCs), referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering
Supreme Court allows trading in cryptocurrency, cancels 2018 ban imposed by Reserve Bank of India RBI
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The Supreme Court on Wednesday ended a 2018 ban on banks from dealing in virtual currencies such as cryptocurrencies including bitcoins. A three-judge bench led by Justice Rohinton Nariman quashed the Reserve Bank of India orders issued in April 2018 that had introduced the restriction.
The central bank’s decision had been challenged by the industry grouping Internet and Mobile Association of India (IMAI), which questioned the RBI’s powers to impose the ban since cryptocurrencies weren’t a “currency” in the legal sense of the term. Instead, the IMAI had insisted that cryptocurrencies were more in the nature of a commodity.
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The Supreme Court will decide on Wednesday, the validity of the 2018 Reserve Bank of India (RBI) decision to ban banks from providing services to any individual or business entities dealing with cryptocurrencies, including bitcoins.
A bench of justices Rohinton Nariman, Aniruddha Bose and V Ramasubramanian will pronounce the judgment at 10.30 AM in a petition by Internet and Mobile Association of India (IMAI), an industry grouping that has challenged the ban.
In April 5, 2018, RBI issued a press release stating that virtual currencies (VCs), referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering. In view of the associated risks, banks were asked not to deal with crypto-related businesses.
A day later, on April 6, 2018, the RBI issued a notification stating that entities regulated by it should not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs.
“Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs”, the notification said.
During the hearing before the Supreme Court, IMAI had argued that cryptocurrency is not strictly currency and was more in the nature of commodity and RBI does not have powers to impose such ban in the absence of a law in that regard prohibiting cryptocurrency.
RBI however contended that it had, right from 2013, been cautioning users of cryptocurrencies and that it considers cryptocurrency a digital means of payment which has to be nipped in the bud so that the payment system in the country is not jeopardized. Towards that end, it is empowered to take decisions banning cryptocurrencies, it argued.
RBI, in December 2013, cautioned users, holders and traders of virtual currencies, including Bitcoins, about the potential financial, legal and security related risks associated with it.
