The Supreme Court of India (SC) today overturned the Reserve Bank of India's (RBI) 2018 circular, which put a ban on cryptocurrency trading in India.
In an April 2018 circular, the RBI had barred banks and other financial institutions from facilitating “any service in relation to virtual currencies.”
Since then, multiple startups engaged in cryptocurrency trading in India have shut shop, including the likes of Koinex.
The SC yesterday overruled the RBI's circular on the grounds of disproportionality, following a petition by a group, including trade body the Internet and Mobile Association of India had challenged central bank’s circular, in part, arguing that India should look at most other nations that are not only allowing cryptocurrency trading, but have moved to launch their own virtual currencies.
In its 2018 order, the RBI said, “entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/ sale of VCs.”
All regulated entities involved in trading of virtual currencies had to exit the relationship within three months from the date of the circular.
Now while the industry has welcomed the SC order, the fact remains that the issue is not completely at rest, as legislative action remains outstanding, and the future of cryptocurrency regulations in India hangs in the balance.
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