Supreme Court lifts RBI Ban on Trading in Cryptocurrency, what it means to investors.

(Judicial Quest News Network)

The Supreme Court on Wednesday struck down the curb on cryptocurrency trade in India.” Supreme Court rules curb on cryptocurrency trade illegal,”

A circular was issued by the reserve bank of India (RBI) which directed banks not to deal in transactions involving cryptocurrency (Internet Mobile Association of India reserve bank of India)

In April 2018 RBI had issued a circular barring baking and financial services from dealing in transactions involving virtual currency or Cryptocurrency such as Bitcoin. It was this circular that was challenged before the Supreme Court by Internet Mobile Association of India. (IMAI).

“Challenging the said Statement and Circular and seeking a direction to the respondents not to restrict or restrain banks and financial institutions regulated by RBI, from providing access to the banking services, to those engaged in transactions in  crypto assets,  the petitioners have come up with these writ petitions. The petitioner in the first writ petition is a specialized industry body known as

‘Internet   and   Mobile   Association   of   India’    which    represents    the

interests of online and digital services industry. The petitioners in the second writ petition comprise of a few companies which run online crypto assets exchange platforms, the shareholders/founders of these companies and a few individual crypto assets traders. It must be stated here that the individuals who are some of the petitioners in the

second writ petition are young high-tech entrepreneurs who have graduated from premier educational institutions of technology in the country.”

The Top Court’s decision came in after several petitions challenging the RBI’s April 2108 order imposing a ban on financial firms of individuals in India from trading in cryptocurrency.

The Indian government had issued repeated warnings against investing in digital currencies, saying these were like Ponzi schemes that offer unusually high returns to early investors.

A three-judge bench of Justices Rohinton Nariman, Aniruddha Bose and V Rama Subramanian pronounced the judgement.

Cryptocurrencies are digital currencies in which encryption techniques are used to regulate the generation on units of currency and verify the transfer of funds, operating independently of central bank.

Bitcoin- the largest and most popular among cryptocurrencies- has appreciated by almost half so far this year, and last month, it touched the $10,000 mark against the US dollar for the first time since October.

The Following were the contents an Contents of the impugned Statement and Circular of RBI:

“Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.

Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such”

virtual currencies. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time. A circular in this regard is being issued separately.”