Supreme Court sets aside RBI ban on cryptocurrency transactions.

Top court finds prohibitive circular too disproportionate

The Supreme Court on Wednesday set aside an April 6, 2018, circular of the Reserve Bank of India (RBI) prohibiting banks and financial institutions from providing services in relation to cryptocurrencies.

In a judgment globally significant for online financial transactions, the top court found the prohibitive circular too disproportionate. The central bank should have opted for a less invasive mechanism to control the pitfalls of cryptocurrency transactions, the court has indicated.

The Bench led by Justices Rohinton Nariman allowed the petition filed by the Internet and Mobile Association of India, which had contended that the RBI circular was “arbitrary, unfair and unconstitutional”.

According to the April 6 circular, the entities regulated by the RBI were prohibited from providing any service, including transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies”.

Cryptocurrencies are digital currencies, in which encryption techniques are used to regulate the generation of the currency units and verify the transfer of funds, operating independently of a central bank. (Source: The Hindu)