{"id":29476,"date":"2020-03-07T12:12:59","date_gmt":"2020-03-07T06:42:59","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=29476"},"modified":"2021-01-20T11:26:01","modified_gmt":"2021-01-20T05:56:01","slug":"supreme-court-removes-rbi-ban-on-cryptocurrency-trading-in-india","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/supreme-court-removes-rbi-ban-on-cryptocurrency-trading-in-india\/","title":{"rendered":"Supreme Court Lifts RBI Ban on Cryptocurrency Trading: Bitcoin Legal in India"},"content":{"rendered":"<p class=\"has-drop-cap\">India&rsquo;s Supreme Court on Wednesday overturned Reserve Bank of India&rsquo;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 <strong>Bitcoin<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Bitcoin\"><strong>[1]<\/strong><\/a><\/sup> within three months. The ban collapsed the cryptocurrency trading business.<\/p>\n\n\n\n<ul><li><em>The three-Judge bench comprising of Justices\nRohinton Fali Nariman, Aniruddha Bose and V. Ramasubramanian brought some\nrespite for India&rsquo;s cryptocurrency traders.<\/em><\/li><li><em>Startups now after the clarity of court\nexpect more balanced regulations from the government.<\/em><\/li><li><em>As per the Plaintiffs, this ruling\nproves that RBI has failed to show that any harm was caused to the banks due to\ncryptocurrency trading.<\/em><\/li><li><em>The apex court also ordered Reserve Bank\nof India to direct the Central Bank to unfreeze Koinex&rsquo;s account.<\/em><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is Cryptocurrency\nTrading?<\/h2>\n\n\n\n<p>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. <\/p>\n\n\n\n<p>Cryptocurrency\ntrading is an act of speculating on cryptocurrency price movements through a\nContract of trading (CFD) account, or buying and selling the underlying coins\nvia an exchange. Blockchain functions by recording cryptocurrency trading in blocks,\nwith the new blocks added in front of the chain.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Historic Day for Cryptocurrency Trading Businesses<\/h2>\n\n\n\n<ul><li>In the present time, there has been an unprecedented crypto development in the country.<\/li><li>Some of the prominent entities dealing in cryptocurrency trading business like OKEx, Binance have entered the Indian <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a> either through partnership or acquisition. Zebpay which had shut down its business in India, also announced its comeback. <\/li><li>According to Shivam Thakral, the founder and CEO OF BuyUCoin, this judgement is historical and also a proud moment for the Indian crypto business. <\/li><li>The leading exchange Unocoin had to shut down its business due to circular passed by RBI on April 6 circular while the founders were arrested even before launching India&rsquo;s first Bitcoin ATM.<\/li><li>Another crypto startup Cashaa a London based start-up which had recently started offering Bitcoin and some other cryptocurrencies in Indian Rupees(INR) has announced plans to organise over 5000 KM long Indian Crypto Bull Roadshow, 2020 to increase awareness amongst the people all over the country.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What was the Case Before Supreme Court about\nCryptocurrency Trading?<\/h3>\n\n\n\n<p>The central bank in its statement on the developmental and regulatory\nPolicies on April 5, 2018, directed all the entities regulated by RBI by RBI\nnot to deal with or provide any services to individual or business entities\ndealing with or settling cryptocurrencies. It also specified that if any\nindividuals or entities are dealing in cryptocurrency trading or settling,\ncryptocurrencies must exit the business.&nbsp;\n<\/p>\n\n\n\n<p>The &nbsp;IAMAI or Internet and Mobile Association of\nIndia on behalf of all Indian\ncrypto startups had filed a civil writ petition&nbsp;in Supreme Court against\nthe Reserve Bank of India(RBI) on May 16, 2018. However, the IAMAI was not the first one to\napproach the court on this matter.<\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<p>However, the matter got clubbed with all other pending crypto\ncases pending across various courts in India in August 2018.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/bitcoin-global-scenario-indian-aspects\/\" target=\"_blank\" rel=\"noopener noreferrer\">Bitcoin: Acceptability on Global Scenario &amp; India aspects<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">What were the Favorable Arguments in the petition which helped in winning the Case for Cryptocurrency Trading?<\/h3>\n\n\n\n<p>According to Article 14, no person shall be denied equality before the law and equal protection of laws within the territory of India.<\/p>\n\n\n\n<p>As per Article 19 (1) (g), all\ncitizens can carry on any occupation, trade or business. The citizens have the\nright to practice any profession.<\/p>\n\n\n\n<p>Counsel Ashim Sood and Shri\nNakul Dewan\nin its 104-page written submission had put forward the following arguments\namong other major arguments:<\/p>\n\n\n\n<ul><li>RBI has no power to prohibit trading in virtual currencies via such circular.<\/li><li>RBI does not have any statutory power to forbid any economic activity or business based on its nature of business.<\/li><li>All other stakeholders such as SEBI ( Securities and Exchange Board of India), Department of Economic Affairs, CBDT etc. have identified the beneficial aspects of cryptocurrencies.<\/li><li>RBI accepts blockchain but not a cryptocurrency; hence it contradicts its statement. <\/li><li>Cryptocurrencies are goods or commodities and not money or other legal tenders; hence it falls outside the preview of RBI Act 1934, Payment and Settlement Systems Act, 2007 and Banking Regulation Act, 1949<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Will Exchanges&rsquo; Accounts Be Unfrozen in Cryptocurrency Trading Business?<\/h3>\n\n\n\n<p>An Indian crypto\nexchange who successfully had raised funding was Koinex. However, the exchange\nwas down in July 2019 after the Central Bank of India (CBI) froze its account\nhaving money over Rs. 12 crores.<\/p>\n\n\n\n<p>Even after many\nrequests, the Central Bank refused to unfreeze the account due to RBI&rsquo;s\ncircular. Due to this Koinex filed a separate writ petition in the Supreme\nCourt requesting to access the account.<\/p>\n\n\n\n<p>The three bench\njudge addressed the issue and said that the lukewarm response of RBI in this\nregard is not justified. The activities carried by Koinex cannot be said as\nunlawful.<\/p>\n\n\n\n<p>RBI must direct\nthe Central Bank of India to defreeze the account of Koinex and release all its\nfunds.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Takeaway<\/h2>\n\n\n\n<p>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.<\/p>\n\n\n\n<p><strong><em>Please find the judgement in the link given below:<\/em><\/strong><\/p>\n\n\n<a href=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/03\/19230_2018_4_1501_21151_Judgement_04-Mar-2020.pdf\" class=\"pdfemb-viewer\" style=\"width: 767px; \" data-width=\"767\" data-height=\"max\" data-toolbar=\"bottom\" data-toolbar-fixed=\"on\">19230_2018_4_1501_21151_Judgement_04-Mar-2020<br><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n\n\n\n<div class=\"read\"><p><b>See our Recommendation:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/cryptocurrencies-challenges-india\/\">Cryptocurrencies: Opportunity &amp; Challenges in India\n<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>India&rsquo;s Supreme Court on Wednesday overturned Reserve Bank of India&rsquo;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 [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":29478,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1174,5],"tags":[],"acf":{"service_id":"215"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Supreme Court removes RBI Ban on Cryptocurrency Trading in India<\/title>\n<meta name=\"description\" content=\"It also specified that if any individuals or entities are dealing in cryptocurrency trading or settling, cryptocurrencies must exit the business.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/supreme-court-removes-rbi-ban-on-cryptocurrency-trading-in-india\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Supreme Court removes RBI Ban on Cryptocurrency Trading in India\" \/>\n<meta property=\"og:description\" content=\"It also specified that if any individuals or entities are dealing in cryptocurrency trading or settling, cryptocurrencies must exit the business.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/supreme-court-removes-rbi-ban-on-cryptocurrency-trading-in-india\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-03-07T06:42:59+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-01-20T05:56:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/03\/Supreme-Court-Lifts-RBI-Ban-on-Cryptocurrency-Transactions.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Deepti Shikha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/Deepti-Shikha.jpg","authorDescription":"Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. 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