Supreme Court backs RBI ban on virtual currency
RBI had restricted all the banks and financial institutions from using crypto currency.
Mumbai: The Supreme Court in its order on Tuesday has refused to lift the ban on cryptocurrencies imposed by Reserve Bank of India, the order has effectively restricted the entry of cryptocurrencies in the World's fastest growing economy.
Reserve Bank of India in its draft dated April 5, 2018 had prohibited all the banks and financial institutions from rendering any services as related to virtual currency, the order of the RBI will remain implemented. RBI gave three months to all the banks and financial institutions to wind up all operations related to cryptocurrencies.
The ban on cryptocurrencies will come into effect from July 6, 2018. According to RBI, bitcoins cannot be considered as legal tenders as it is not physically available, under Indian law it is mandatory for the coins to be physically present with government stamp on it. Many countries are amending rules to make crypto transactions more secure.
“We are fairly close to developing a template that might be in the best interests of our country. We have moved pretty far in this regard, and we have prepared a draft that entails what parts of this businesses should be banned and what should be preserved. This should be discussed by the first week of July and we should wrap this up within in the first fortnight of July,” as told by Subhash Chandra Garg, Secretary of Department of Economic Affairs, to ET Now.
“This a win for the RBI and a big blow to virtual currency exchanges and traders. In our earlier request to the RBI as well, we had asked it to extend the deadline by a month after the July 20 hearing,” said Rashmi Deshpande, associate partner at Khaitan & Co, a law firm representing Kali Digital Eco-Systems. Kali Digital Eco-Systems was planning to start operations related to cryptocurrency later this year.
Despite the ban on cryptocurrency by Supreme Court, exchanges are hopeful that government might bring in a draft to regularise bitcoin and other virtual currencies, as told by a senior government official in report.