On March 4, 2020 the Hon Supreme Court of India delivered a judgment which is viewed or interpreted as COURTS HAVE ALLOWED VIRTUAL CURRENCIES IN INDIA OR COURTS HAVE LIFTED BAN ON VIRTUAL CURRENCIES.
The order was for striking down circular issued by RBI dated April 6, 2018, stating in exercise of the powers conferred by Section 35A read with Section 36(1)(a) and Section 56 of the Banking Regulation Act, 1949 and Section 45JA and 45L of the Reserve Bank of India Act, 1934 (hereinafter, “RBI Act, 1934”) and Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007, and directing the entities regulated by RBI (i) not to deal in virtual currencies nor to provide services for facilitating any person or entity in dealing with or settling virtual currencies and (ii) to exit the relationship with such persons or entities, if they were already providing such services to them.
Reserve Bank of India also issued a “Statement on Developmental and Regulatory Policies” on April 5, 2018, paragraph 13 of which directed the entities regulated by RBI (i) not to deal with or provide services to any individual or business entities dealing with or settling virtual currencies and (ii) to exit the relationship, if they already have one, with such individuals/ business entities, dealing with or settling virtual currencies (VCs).
This was Challenged by the respondents who prayed for not to restrict or restrain banks and financial institutions regulated by RBI, from providing access to the banking services, to those engaged in transactions in crypto assets, through the writ petitions.
Though the prayer was upheld by the Hon. Supreme Court of India, the order
The bench consisted of Hon. Justice Rohinton Fali Nariman, Aniruddha Bose and V. Ramasubramanian has observed that the consistent stand of RBI is that they have not banned VCs and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions that government is proposing to ban the mining, generation, holding, selling, dealing in, issuing, transferring, disposing of or using crypto currency in the territory of India.
