Supreme Court Reserves Judgment On Pleas Challenging RBI Curbs On Cryptocurrency Trading

The Supreme Court today reserved its judgment on a clutch of petitions challenging the Reserve Bank of India's circular in 2018 that barred banks from trading in cryptocurrencies.

A three-judge top court bench headed by Justice Rohinton Nariman reserved the judgment after hearing arguments from both sides.

The petitioners challenging the RBI circular argued that the circular put an end to the industry by taking it out of the formal economy even when there's no ban on cryptocurrencies in the country. The RBI circular, the petitioners said, will result in cryptocurrency trade being conducted through cash and other black market transactions while denying the industry access to participants who have already been vetted by the central bank's “know your customer” norms, they contended.

The RBI's circular taking cryptocurrencies out of the banking channels would deplete the ability of law enforcement agencies to regulate illegal activities in the industry, the petitioners said.

The central bank had, on April 6, 2018, issued the circular that barred RBI-regulated entities 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”.

It argued that it was a policy decision in a complex issue, highlighting that it had been cautioning users of cryptocurrencies since 2013 and those who ignored them did it at their own risk.

The central bank said it was performing its duty as the topmost regulator of monetary policy in India and its decision was within the measures it's empowered to take when it feels such steps are required against industries that may jeopardise the payment system of the country.

Justice Aniruddha Bose and Justice V Ramasubramanian are the other two members of this bench. Justice Nariman had indicated yesterday that a judgment on the validity of RBI's circular can be expected in February.