Supreme Court Quashes RBI Ban on Cryptocurrency Banking

RBI had in 2018 forbid all banking relationships with individuals or businesses dealing in virtual currency.

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Supreme Court Quashes RBI Ban on Cryptocurrency Banking

"We have allowed the writ petitions," a Supreme Court bench said

Highlights
  • Supreme Court allowed a batch of pleas challenging the 2018 circular
  • The circular was released by Reserve Bank of India
  • Banks were prohibited from providing any cryptocurrency services

Supreme Court overturned on Wednesday a central bank ban forbidding lenders to facilitate banking transactions for cryptocurrency exchanges and traders, removing a major hurdle for the development of the sector. In April 2018, the Reserve Bank of India gave entities it regulated three months to snap all banking relationships with individuals or businesses dealing in virtual currency.

The Supreme Court allowed a batch of pleas challenging the 2018 circular of the Reserve Bank of India that had prohibited banks and financial institutions from providing services with relation to cryptocurrencies.

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

"We have allowed the writ petitions," a bench headed by Justice R F Nariman said while pronouncing the verdict.

According to the April 6, 2018 circular, the entities regulated by the RBI are prohibited from "providing any service in relation to virtual currencies including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies".

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Further reading: Cryptocurrency, Supreme Court, RBI
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