On March 4, 2020, Supreme Court (SC) has lifted ban on trading in virtual currency, cryptocurrency and bitcoins by cancelling the Reserve Bank of India (RBI) 2018 circular that barred banks from serving companies dealing in cryptocurrency exchanges. The decision in this regard has been taken by the three-judge Bench headed by Justice Rohinton Fali Nariman and 2 other members are Justice Shripathi Ravindra Bhat, and Justice V Ramasubramanian.
- The plea was filed by Internet and Mobile Association of India (IAMAI) challenging RBI’s 2018 circular because the members of IAMAI also include cryptocurrency exchanges.
- IAMAI had claimed that the move of RBI banned legitimate business activity via the virtual currencies (VCs).
What is RBI’s 2018 circular?
On April 6, 2018, RBI had issued the circular barring RBI-regulated entities from providing any service in relation to virtual currencies to any person or entity dealing or settling with those. The services include transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies.
What is Cryptocurrency?
Cryptocurrency is used to move money between bank and a client which usually runs on a blockchain technology. Blockchain is a type of Distributed Ledger Technology (DLT). DLT uses independent computers aka nodes to record, share and synchronize transactions in their respective electronic ledgers instead of keeping data centralized as in a traditional ledger.
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