SC gives green signal to cryptocurrencies

/2 min read

ADVERTISEMENT

The Supreme Court overturns RBI’s April 2018 notification prohibiting central bank-regulated entities from facilitating any dealing in virtual currencies, including Bitcoins.
SC gives green signal to cryptocurrencies

The Supreme Court quashed on Wednesday the central bank’s prohibition on cryptocurrencies.

The judgment came in a case filed by the Internet and Mobile Association of India (IAMAI) against the Reserve Bank of India (RBI) challenging the banking regulator’s un-consulted ad-hoc stand against cryptocurrencies, also known as virtual currencies.

In April 2018, the RBI had said that though technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system, there were concerns over consumer protection, market integrity and money laundering when it came to virtual currencies.

In a notification on April 6, 2018, the RBI said that in view of the associated risks (with cryptocurrencies), it had decided that entities regulated by it would not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling virtual currencies.

Fortune India Latest Edition is Out Now!
India's Top 100 Billionaires

August 2025

As India continues to be the world’s fastest-growing major economy, Fortune India presents its special issue on the nation’s Top 100 Billionaires. Curated in partnership with Waterfield Advisors, this year’s list reflects a slight decline in the number of dollar billionaires—from 185 to 182—even as the entry threshold for the Top 100 rose to ₹24,283 crore, up from ₹22,739 crore last year. From stalwarts like Mukesh Ambani, Gautam Adani, and the Mistry family, who continue to lead the list, to major gainers such as Sunil Mittal and Kumar Mangalam Birla, the issue goes beyond the numbers to explore the resilience, ambition, and strategic foresight that define India’s wealth creators. Read their compelling stories in the latest issue of Fortune India. On stands now.

Read Now

Such services included maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and the transfer/receipt of money in accounts relating to the purchase/sale of cryptocurrencies.

“Regulated entities which already provide such services shall exit the relationship within three months from the date of circular,” the RBI notification further ordered.

Later, on April 10, in its first bi-monthly monetary policy statement for FY19, the central bank said that it had repeatedly cautioned users, holders, and traders of virtual currencies, including Bitcoins, regarding various risks in dealing with such virtual currencies.

The RBI had separately explained that its rationale to impose the prohibition was to ring-fence the RBI-regulated entities from the risk of dealing in virtual currencies.

According to a leading legal news portal, Bar and Bench, the Supreme Court judgment, rendered by a bench comprising Justices Rohinton Nariman, S. Ravindra Bhat and V. Ramasubramanian, was allowed on the ground of proportionality.

In its report on the subject, Bar and Bench explained that according to the petitioners (IAMAI) crypto currencies are like commodity and not currency, as the name suggests. And hence the RBI ought to have treated it like commodity. IAMAI counsels had also contended that cryptocurrencies are like “casino chips” and not actual currency.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.