SC allows trade in cryptocurrency, revokes RBI ban

The Supreme Court has lifted a ban on cryptocurrency trading, revoking the Reserve Bank of India’s two-year-old diktat that had barred its trade in the country.

In April 2018, RBI had issued a circular banning banking and financial services from dealing in transactions involving cryptocurrencies or virtual currencies such as Bitcoin, Ethereum and Ripple.

On SC’s decision, RBI made it clear that their circular had only refrained banking services from dealing in fiat currency, and it was well within its domain.

The RBI also argued that the decision was taken to prevent the cryptocurrency industry from affecting payment services in India.

The circular was challenged by Internet Mobile Association of India (IAMAI), which had earlier argued that India’s consumer protection and anti-money laundering laws could be applied to virtual currencies, rather than banning them.

According to the petitioner, any trade in the cryptocurrency was legal within the ambit of the Constitution of India. The ban would remove cryptocurrency trade from the formal economy and it may get traded through illegal routes or hawala.

The crypto community has hailed the top court’s decision, and it could be a game-changer for many startups and crypto exchanges who have either closed their operations or shifted their base from the country.

For allowing crypto trade in the country, the government may now come with stringent regulation and with proper infrastructure that has been a matter of concern for regulators, startups and stakeholders.