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India’s Supreme Court on Wednesday overturned Reserve Bank of India’s (RBI) two-year-old ban on cryptocurrency trading in the country, which is considered as a historic verdict. Now the banks are permitted to handle cryptocurrency trading or transactions from exchanges and traders. This judgement overturns the cryptocurrency trading ban that had come as a major blow to the industry. In April 2018, RBI had ordered all the financial institutions to cut off ties with businesses or individuals dealing in virtual currency such as Bitcoin within three months. The ban collapsed the cryptocurrency trading business.
Table of Contents
Cryptocurrency is a digital currency in which encryption techniques like blockchain are used to regulate the generation of currency and verify the transfer of money or funds, operating independently of the Reserve Bank of India.
trading is an act of speculating on cryptocurrency price movements through a
Contract of trading (CFD) account, or buying and selling the underlying coins
via an exchange. Blockchain functions by recording cryptocurrency trading in blocks,
with the new blocks added in front of the chain.
The central bank in its statement on the developmental and regulatory
Policies on April 5, 2018, directed all the entities regulated by RBI by RBI
not to deal with or provide any services to individual or business entities
dealing with or settling cryptocurrencies. It also specified that if any
individuals or entities are dealing in cryptocurrency trading or settling,
cryptocurrencies must exit the business.
The IAMAI or Internet and Mobile Association of
India on behalf of all Indian
crypto startups had filed a civil writ petition in Supreme Court against
the Reserve Bank of India(RBI) on May 16, 2018. However, the IAMAI was not the first one to
approach the court on this matter.
An Ahmedabad based cryptocurrency trading firm Kali Digital, which used to run multi-cryptocurrency exchange CoinRecoil was the first to file a petition in Delhi High Court on April 16, 2018, which was followed by multiple cases all over India.
However, the matter got clubbed with all other pending crypto
cases pending across various courts in India in August 2018.
Also, Read: Bitcoin: Acceptability on Global Scenario & India aspects.
According to Article 14, no person shall be denied equality before the law and equal protection of laws within the territory of India.
As per Article 19 (1) (g), all
citizens can carry on any occupation, trade or business. The citizens have the
right to practice any profession.
Counsel Ashim Sood and Shri
in its 104-page written submission had put forward the following arguments
among other major arguments:
An Indian crypto
exchange who successfully had raised funding was Koinex. However, the exchange
was down in July 2019 after the Central Bank of India (CBI) froze its account
having money over Rs. 12 crores.
Even after many
requests, the Central Bank refused to unfreeze the account due to RBI’s
circular. Due to this Koinex filed a separate writ petition in the Supreme
Court requesting to access the account.
The three bench
judge addressed the issue and said that the lukewarm response of RBI in this
regard is not justified. The activities carried by Koinex cannot be said as
RBI must direct
the Central Bank of India to defreeze the account of Koinex and release all its
Bitcoin and all other types of virtual currency are just one type of tokens on the blockchain. Fintech could do wonders with the blockchain technology; for example, it can help in cutting the cost of cross-border remittances. Instead of banning cryptocurrencies, the government should empower the Reserve Bank of India (RBI) to regulate them. Cryptocurrency should be treated as commodities that can perform functions like making payments, serve as a unit of account and store value.
Please find the judgement in the link given below:
See our Recommendation: Cryptocurrencies: Opportunity & Challenges in India
Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. She has enough experience in handling legal affairs of the company. In the initial days of her career, she has worked as a legal researcher and has 3+ years of experience.
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