Forbidding cryptocurrency to control illegitimate transactions – RBI to Supreme Court

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Forbidding cryptocurrency to control illegitimate transactions – RBI to Supreme Court
Forbidding cryptocurrency to control illegitimate transactions – RBI to Supreme Court

The Reserve Bank of India on Friday to Supreme Court that it is essential to prohibit Bitcoin and other cryptocurrencies to investigate unlawful transactions that are going to affect the international flow of funds.

On Friday, the bench Chief Justice Dipak Misra, Justice A.M Khanwilkar, and Justice D.Y Chandrachud granted time to the Centre and RBI for the responses and fixed the petition on September 11 for final hearing.

RBI told the Supreme Court that it is important to prohibit banks from offering services to the domestic cryptocurrency sector to control illegal transactions and the circulation of virtual currency would impact the international funds.

RBI Forbade Banks to offer Cryptocurrencies

Unlike RBI, Cryptocurrencies are “a stateless digital currency” where encryption techniques are used for trading and these virtual currencies are generated independently without any authentication.

The policy introduced in April that forbade banks to offer Cryptocurrencies through bank accounts to their own retail customers. The prohibition came into existence on July 5, after effect of unsuccessful final-hour attempt to persuade Supreme Court to delay the ban this month.

Forbidding cryptocurrency to control illegitimate transactions – RBI to Supreme Court
Forbidding cryptocurrency to control illegitimate transactions – RBI to Supreme Court

The senior Advocate Gopal Subramaniam who represents the IAMAI (Internet and Mobile Association of India) highlighted the extremity of the issue surrounding the RBI and called for the hearing without any further delays and negotiation.

September 11-  Decision will be announced on Cryptocurrency 

The bend granted three weeks time the federal bank and the central government including A.M Khanwilkar and D Y Chandrachud for sending responses on the contemporary issue.

“There shall be a stay of further proceedings in the cases sought to be transferred. It is further directed that no High Court shall entertain any petition relating to the circular No…. dated April 6, 2018, issued by the Reserve Bank of India on ‘Prohibition on dealing in Virtual Currencies’,” the bench had ordered.

September 11 is going to be the judgment day for the domestic Cryptocurrency sector. The decision would establish regulations and effectively recognize and legalize the sector in future.

As reported by rumors last week, an inter-governmental committee of multiple ministries tasked to form a framework for the cryptocurrency sector isn’t considering an outright ban of cryptocurrency trading. Instead, authorities could enforce new regulatory norms that are likely to classify cryptocurrencies as commodities.

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