Supreme Court removes RBI ban on trading in cryptocurrency

The apex court gave its ruling on the RBI's 2018 decision to ban banks from providing services to any individual or business entities dealing with cryptocurrencies, including bitcoins.

Supreme Court removes RBI ban on trading in cryptocurrency
Representational Image: ZeeNews

New Delhi: The Supreme Court on Wednesday (March 4) lifts ban on cryptocurrency imposed by the Reserve Bank of India (RBI). The apex court gave its ruling on the RBI's 2018 decision to ban banks from providing services to any individual or business entities dealing with cryptocurrencies, including bitcoins.

A bench of justices Rohinton Nariman, Aniruddha Bose, and V Ramasubramanian pronounces the judgment on a petition by Internet and Mobile Association of India (IMAI), which had challenged the ban. The IAMAI argued that cryptocurrency is not strictly currency and is more in the nature of the commodity, therefore, RBI does not have powers to impose such a ban in the absence of a law in that regard. 

In April 2018, RBI had issued a notification to ban cryptocurrency trading in India, directing that all entities regulated by it shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling those.

The RBI had also cautioned users, holders, and traders of virtual currencies, including bitcoins, regarding various risks associated in dealing with such virtual currencies. The RBI's April 6, 2018 circular was later challenged in the Supreme Court.

On April 5, 2018, the RBI notification on cryptocurrency said, "Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs (virtual currencies)."

Bitcoin, which is the most popular cryptocurrency, appreciated by almost half so far this year to regain the $10,000 mark against the US dollar for the first time since October 2019. 

Other major cryptocurrencies that tend to move in correlation with Bitcoin also gained this year. Ethereum has more than doubled, while Ripple's XRP is reported to be up over 75 per cent.

On the international front, Facebook has decided to revamp its plans for digital currencies amid regulatory scrutiny. The social media company will offer digital versions of government-backed currencies including the dollar and euro, as well as its proposed Libra currency when it launches its digital wallet, said The Information report on Tuesday, citing people familiar with the matter. 

The Information earlier reported that Facebook would not make Libra available on its own services but later corrected its article.