In a landmark judgement that would possibly usher in a new era of digital currencies in India, the country’s Supreme court has quashed a 2018 ban imposed on dealing of cryptocurrency by the RBI. This will essentially rank India among one of those rare countries, where the top court has taken a more progressive approach towards cryptocurrency.
A three-judge bench of India’s Supreme Court, led by Justice Rohinton Nariman rejected the Reserve Bank of India notification issued in April 2018 that had introduced the restriction.
The judgement has come in on the challenge raised by IAMAI, India’s industry grouping of country’s top Internet and Mobile companies. IAMAI, in its challenge to the judgement, had questioned the RBI’s powers to impose the ban since cryptocurrencies weren’t a “currency” in the legal sense of the term. Instead, the IAMAI had insisted that cryptocurrency was more in the nature of a commodity.
According to a report in Hindustan Times, the central bank had underscored that it had treated cryptocurrency as a digital means of payment that had to be nipped in the bud so that the country’s payment system is not jeopardised.
India’s central bank has been notoriously accused of issuing orders that create a sense of doubt and fear among general consumers looking to deal in cryptocurrencies. In December 2013 for example, RBI cautioned users, holders and traders of virtual currencies, including Bitcoins, about the potential financial, legal and security related risks associated with it. And if that wasn’t it, the central bank, in 2018, went ahead to impose a blanket ban on dealing with virtual currencies. It had stated that entities regulated by it shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs.
These notifications had also resulted in shutdowns of many notable Indian startups in the cryptocurrency domain. Arrests and raids were also made in a lot of such cases, all of which drew intense criticism from industry and consumers alike.
The judgement from Supreme Court will also make Indian Government’s last year attempt to ban cryptocurrency, futile. The Indian government’s Inter-ministerial Committee (IMC), which was appointed to study the issues related to virtual currencies (VCs) had submitted its report along with a draft bill to the Government. In this report, the committee suggested banning private cryptocurrencies in India.