In the landmark case between Internet and Mobile Association of India vs. Reserve Bank of India, the Supreme Court lifted the ban on the trade of virtual currencies and cryptocurrency which was imposed by the Reserve Bank of India (“RBI”) on its regulated entities by way of an April 2018 circular.
The bench comprised of Justice S Ravindra Bhat, V Ramasubramanian and headed by Justice Rohinton Nariman accepted the petition on the grounds of proportionality.
The Petitioners primarily prayed for striking down the RBI circular dated 6th April 2018 on the grounds that it simply banned the trade and exchange of virtual currencies but not the virtual currency itself. Virtual currency is a type of unregulated digital currency that is only available in electronic form. It is stored and transacted only through designated software, mobile or computer applications, or through dedicated digital wallets, and the transactions occur over the internet through secure, dedicated networks. Virtual currency is considered to be a subset of the digital currency group, which also includes cryptocurrencies, which exist within the blockchain network. Further, they contended that since the time the RBI has been monitoring the manner in which the virtual currency function, they have been unable to find to any adverse use of the same. Finally, the put forth that cryptocurrency isn’t actual money currency.
The Court specifically referred to the Inter-Ministerial Committee Report which opined that a ban on the VCs will be an extreme measure. Further, it said only after a thorough study of the nature and functioning of VCs and Cryptocurrency, a regulatory framework may be introduced.
The Court accepted the abovementioned contentions of the Petitioners. It lifted the ban on the grounds that in spite of issuing two circulars, the RBI has not banned Cryptocurrencies and has not yet been able to find anything wrong in this matter.
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Link for the judgement = Internet & mobile association of India v. RBI