Supreme Court lifts RBI ban on dealing in cryptocurrency
The Supreme Court on March 4, 2020 lifted the RBI ban on trading in virtual currencies such as Bitcoin. The order comes as a major relief for the traders in this sector.
The apex court read out its judgement while hearing a plea from the Internet and Mobile Association of India (IMAI) challenging the RBI ban. The IMAI petition claimed that by banning virtual currencies, RBI had effectively banned legitimate business activity through virtual currencies.
The Reserve Bank of India had in 2018 imposed restrictions on the banks from facilitating banking transactions for virtual currency exchanges and traders.
SC allows trading in cryptocurrency: Key Details
• The Supreme Court has lifted the ban imposed by RBI on trading in virtual currencies referred to as cryptocurrencies and crypto assets.
• The ruling was delivered by a three-judge bench led by Justice RF Nariman and comprising Justices V Ramasubramanian and Aniruddha Bose. The bench overturned RBI’s April 2018 notification that had introduced the restriction.
• The IMAI had filed a petition before the court questioning RBI’s powers of banning virtual currencies when they aren’t a currency in a legal sense. The association had argued that cryptocurrencies are more like a commodity.
• The RBI in its arguments before the court had stated that it had treated cryptocurrency as a digital payment method, which had to be stopped to ensure that the country’s payment system is not jeopardised.
• The RBI referred to many cases in this context, when it had issued a caution to the users of cryptocurrencies about the virtual currency.
What are Cryptocurrencies?
Cryptocurrencies are virtual or digital currencies that have encryption techniques, which are used to regulate the generation of currency units and verify the transfer of funds. They operate independently of a central bank. Bitcoin is the most popularly accepted cryptocurrency. Japan had accepted Bitcoin as legal currency in 2017.
The Reserve Bank of India had issued a notification on April 5, 2018, stating that virtual currencies such as Bitcoin raise concerns over factors such as market integrity, consumer protection and money laundering.