The Supreme Court Of India (SCI) on Wednesday March 04,2020 quashed an order by the Reserve bank of
India (RBI) banning financial services firms from trading in virtual
currency or cryptocurrency
Its decision comes after hearing several petitions challenging RBI's April 2018 order imposing a ban on financial firms or individuals in India from trading in cryptocurrencies
The development comes almost two years after trading in virtual currency was banned by RBI.
A three-judge bench led by Justice Rohinton Nariman quashed the Reserve Bank of India notification issued in April 2018 that had introduced the restriction.
The central bank’s decision had been challenged by the industry grouping Internet and Mobile Association of India (IMAI), which questioned the RBI’s powers to impose the ban since cryptocurrencies weren’t a “currency” in the legal sense of the term. Instead, the IMAI had insisted that cryptocurrencies were more in the nature of a commodity.
While the order revoked the ban on illegal cryptocurrency trade, it is worth noting that the government already prepared a draft bill that seeks to prohibit mining, holding, selling, trade, issuance, disposal or use of cryptocurrency in the country
It is worth mentioning that under the draft bill, all the aforementioned activities can be punished with a fine or imprisonment up to 10 years, or both in some cases
The draft bill was prepared by a government panel which also called for the launch of an official government-backed digital currency in India to function like banknotes, to be issued through the Reserve Bank of India (RBI)
Meanwhile, there continues to be global uncertainty on virtual currency trade, especially with regulatory issues
The Indian government has issued repeated warnings against investing in digital currencies, saying these were like Ponzi schemes that offer unusually high returns to early investors
The government panel, headed by the then finance secretary Subhash Chandra Garg, recommended a fine of up to 250 million rupees ($3.63 million) and imprisonment for up to 10 years for anyone who mines, generates, holds, sells, transfers or issues cryptocurrency
Its decision comes after hearing several petitions challenging RBI's April 2018 order imposing a ban on financial firms or individuals in India from trading in cryptocurrencies
The development comes almost two years after trading in virtual currency was banned by RBI.
A three-judge bench led by Justice Rohinton Nariman quashed the Reserve Bank of India notification issued in April 2018 that had introduced the restriction.
The central bank’s decision had been challenged by the industry grouping Internet and Mobile Association of India (IMAI), which questioned the RBI’s powers to impose the ban since cryptocurrencies weren’t a “currency” in the legal sense of the term. Instead, the IMAI had insisted that cryptocurrencies were more in the nature of a commodity.
While the order revoked the ban on illegal cryptocurrency trade, it is worth noting that the government already prepared a draft bill that seeks to prohibit mining, holding, selling, trade, issuance, disposal or use of cryptocurrency in the country
It is worth mentioning that under the draft bill, all the aforementioned activities can be punished with a fine or imprisonment up to 10 years, or both in some cases
The draft bill was prepared by a government panel which also called for the launch of an official government-backed digital currency in India to function like banknotes, to be issued through the Reserve Bank of India (RBI)
Meanwhile, there continues to be global uncertainty on virtual currency trade, especially with regulatory issues
The Indian government has issued repeated warnings against investing in digital currencies, saying these were like Ponzi schemes that offer unusually high returns to early investors
The government panel, headed by the then finance secretary Subhash Chandra Garg, recommended a fine of up to 250 million rupees ($3.63 million) and imprisonment for up to 10 years for anyone who mines, generates, holds, sells, transfers or issues cryptocurrency
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