38.6c New Delhi, India, Friday, April 19, 2024

SC Lifts Ban Imposed By RBI On Cryptocurrency Such As Bitcoin

By LawStreet News Network      04 March, 2020 03:03 PM      0 Comments
SC RBI Cryptocurrency Bitcoin

On March 4, 2020 (Wednesday) Supreme Court bench comprising Justice Rohinton Fali Nariman, Justice S Ravindra Bhat and Justice V Ramasubramanian, after hearing plea of the Internet and Mobile Association of India (IAMAI), lifted ban imposed by Reserve Bank of India (RBI) that barred banks from giving access to companies trading in cryptocurrencies.

"We have allowed the writ petitions," a bench headed by Justice RF Nariman said while pronouncing the verdict.

According to the RBI circular dated April 6, 2018, the entities regulated by the RBI are prohibited from "providing any service in relation to virtual currencies including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies".

Last year, the government committed, headed by then finance secretary Subhash Chandra Garg, suggested a hefty penalty up to Rs. 25 crore and imprisonment for up to 10 years for anyone who mines, holds or transfers or issues cryptocurrency. However, it asked the Centre to consider the launch of an official government-backed digital currency. The Centre, however, is yet to act on these suggestions. Regulated entities that were already providing such services were told to exit the relationship within three months.

Advocate Ashim Sood, appearing for IAMAI, submitted that Reserve Bank of India lacked jurisdiction to forbid dealings in cryptocurrencies. The blanket ban was based on an erroneous understanding that it was impossible to regulate cryptocurrencies, Sood submitted.

It was also argued that cryptocurrencies were not "currency" in the strict sense, and that they could be termed as a medium of exchange or a store of value.

Senior Advocate Shyam Divan, appearing for RBI, disagreed and said that it was a mode of digital payment, which the RBI had the power to control. He further added they can be a channel for money laundering and terror financing. Several news reports mentioned that real estate players and jewellers were reportedly among the majority of people who invested in virtual currencies. Worth mentioning here is that it is the anonymity of cryptocurrency, minted through computer algorithms, that has made them so popular but has also raised the risks. These are stored in digital wallets, in the cloud or on the user’s computers.

Bitcoin, the most valued cryptocurrency in the world, fell by 0.39 per cent at USD 8,815. The market cap of the virtual currency stood at around USD 161 billion. Bitcoin uses encryption and a blockchain database that enables the fast and anonymous transfer of funds outside a traditional centralised payment system. Bitcoin value is determined by open-market bidding on bitcoin exchanges, similar to the way that stock prices are determined by bidding on exchanges.

Author – Satwik Sharma

Share this article:

User Avatar

Leave a feedback about this

Trending Judiciary
PIL filed by Ashwini Kumar Upadhyay in SC for 3-yr Bachelor of Law degree after Class XII

PIL by Ashwini Kumar in SC seeks to shorten law degree to 3 years post-Class XII, citing current 5-year span as irrational.

18 April, 2024 11:21 AM
Trending Judiciary
'We all know what happened when there were ballot papers,' SC on return of ballot papers or 100% VVPATs count

SC questions EVM process, debates ballot paper return and 100% VVPAT count verification, citing past issues.

18 April, 2024 01:53 PM


Trending Interview
LSJ Exclusive Interview: How BJP govt will free Chhattisgarh from “Naxal menace”? [Watch Video]

What is Chhattisgarh govt's plan for solving the Maoist/Naxalite problem in the state? Will there be a surgical strike against the Naxals or solution will be found via diplomatic channels? Read the Exclusive Interview with the Deputy Chief Minister Vijay Sharma.

13 April, 2024 12:33 PM
Trending Judiciary
SC rejects review of order to pay Rs 1.54 Cr compensation to ex Air Force staff for transfusion of HIV infected blood [Read Order]

SC denies review of Rs 1.54 Cr HIV compensation order to ex-Air Force staff for medical negligence.

13 April, 2024 03:13 PM
Trending Legal Insiders
CJI cautions against overlooking ethical legal consideration on use of AI in court adjudication

CJI D Y Chandrachud warns about ethical, legal challenges in AI use in courts, stressing need for thorough review.

13 April, 2024 07:08 PM
Trending Legal Insiders
Need to safeguard judiciary from unwarranted pressures: 21 ex-judges write letter to CJI

21 ex-judges write to CJI Chandrachud urging protection of judiciary from pressures undermining its integrity and autonomy.

15 April, 2024 12:17 PM


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email