Supreme Court paves way for virtual currency; Bitcoin to be now used in India

In a pathbreaking judgment on Wednesday, the Supreme Court has paved the way for virtual currency in India by lifting the ban that had been put in place by the Reserve Bank of India disallowing banks from dealing in cryptocurrency transactions. 

On April 6, 2018, the RBI had issued a circular restraining banks and other financial entities from dealing in transactions involving Cryptocurrency like BitCoin. The Internet Mobile Association of India had soon after moved Supreme Court in a challenge to this circular, calling it arbitrary and unjustified.

A three-judge bench of Justices Rohinton Nariman, S. Ravindra Bhat, and V. Subramanian pronounced the verdict on March 4 where the plea by the Internet Mobile Association was allowed and the RBI decision was held disproportional. 

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The petitioners had argued before the top court that trading in cryptocurrencies in the absence of a law banning it was a “legitimate” business and that the RBI cannot restrain them from carrying on this business.

They also stated that Cryptocurrency was a “commodity” as opposed to actual currency and therefore should be treated as a commodity by the RBI, despite what the name suggests. The petitioners gave an example of “casino chips” to draw parallels with how Cryptocurrency works. 

The RBI, on the other, stated that it had consistently opposed allowing any alternate modes of payment which can compromise upon the integrity of the banking system. Moreover, there was no law in place banning cryptocurrency, it was only a circular putting a ban on banks from “providing any service in relation to virtual currency” by the RBI.

After lengthy arguments, the verdict had been reserved in January this year by the three-judge bench which delivered the order today.

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