The Reserve Bank of India (RBI) on Friday told the Supreme Court that it is necessary to regulate bitcoin and other cryptocurrencies in India as it encourages “illegal transactions” and impacts international flow of funds. The RBI, through senior counsel Shyam Divan, told a bench led by Chief Justice Dipak Misra that this “particular means” will “encourage illegal transactions” and also impact international flow of funds. It has immense policy dimensions.”
An interdisciplinary committee under Subhash Garg, secretary of economic affairs in the finance ministry, set up last year to examine virtual currencies is yet to give its report on the regulatory framework for cryptocurrencies. He sought three weeks time to respond to various petitions seeking such regulations in India.
The apex court then posted the matter for final hearing on September 11 after senior counsel Gopal Subramanium, appearing for the petitioners, stated that the matter is serious and should be heard and disposed of at the earliest. He argued that RBI’s circular that mandated banks, e-wallets, and payment gateway providers to withdraw support for cryptocurrency exchanges and other businesses dealing with virtual currencies in India was “baseless”. “In today’s tech world, transactions are done online and you need banks for that. This issue should concern the government,” he argued.
The apex court had earlier this month refused to stay the RBI’s April 6 circular that had virtually banned banks and financial institutions from providing services to any individual or business dealing in digital currencies within three months. As of now, the banks and bourses have closed down their operations on July 6. The SC was hearing a couple of petitions filed by the Internet and Mobile Association of India and also a transfer petition by RBI.
Various PILs, including the one filed by a group of eleven different representatives from various crypto-related businesses, are pending before the apex court. They had challenged the RBI circular that declared cryptocurrency-related businesses like virtual currencies, crypto assets, etc., as illegal in India.