The supreme court of India has ruled against the country’s Reserve Bank and lifted a ban on virtual currencies (VCs).
The 180-page ruling was published on Wednesday and saw victory handed to the internet and mobile association of India.
The case dates back to April 2018 when the Reserve Bank of India (RBI) issued a statement on developmental and regulatory policies which directed regulated entities:
- not to deal with or provide services to any individual or business entities dealing with or settling VCs, and
- to exit the relationship, if they already have one with such individuals/business entities dealing with or settling VCs.
The statement was followed up with a circular reiterating the same instructions.
Not happy
Unsurprisingly; the internet and mobile association of India, which represents the interests of the online and digital services industry, objected.
One of the key points raised was that VCs are not legal tender but tradable commodities/digital goods and, therefore, don’t fall under the RBI’s regulatory framework.
The association added that stake holders; including the department of economic affairs, the securities and exchange board (SEBI) and the central board of direct taxes, had “recognised the positive and beneficial aspects of cryptocurrencies as digital assets”
It said that the “RBI has taken a contra position without any rational basis”.
The central bank naturally disagreed, and the matter was taken to court.
Verdict
In summation, justice Rohinton Nariman said that the central bank had considered the issues raised by the petitioners, but added the “RBI has not so far found, in the past five years or more, the activities of VC exchanges to have actually impacted adversely the way the entities regulated by RBI function”.
Nariman therefore judged that “the petitioners are entitled to succeed” and “set aside” the circular.
