The Supreme Court quashed an Order which was passed by the Reserve Bank of India (RBI) in April, 2018. In 2018 the RBI banned the financial services firms from trading in virtual currency or cryptocurrency.
On 04th March, 2020 the Hon’ble Supreme Court made the decision after hearing several petitions challenging RBI’s April, 2018 Order imposing a ban on financial firms or individuals in India from trading in cryptocurrencies.
While the Order lifted the ban on illegal trade in cryptocurrency, it should be noted that the Government has already prepared a draft Bill that seeks to prohibit the country’s mining, keeping, sale, exchange, issuance, disposal or use of cryptocurrency.
The cryptocurrency investment has been legalised nearly two years after RBI banned trading in virtual/cryptocurrency.
The draft Bill was prepared by the Government Panel which also called for the launch of an official government-backed digital currency in India to be issued through the RBI similar to banknotes. It is worth mentioning that selling fraud cryptocurrency can be prosecuted under the Draft Bill with a fine or imprisonment of up to 10 years, or both in some cases.
It would be interesting to note that at the time when RBI had imposed a ban on cryptocurrency the ex-Finance Secretary Mr. Subhash Chandra Garg, who led the Government Commission proposed a fine of up to rupees 250 million ($3.63 million) and imprisonment for up to 10 years for anyone who mines, creates, owns, sells, transfers or issues cryptocurrency.
The Government of India has issued repeated warnings on the investment in digital currencies, saying these were like Ponzi Schemes that offer unusually high returns to early investors and subsequently makes them loose their hard earned money.
Only time will tell whether the legalization of cryptocurrency would be beneficial to the Indian economy.
THE INDIAN LAWYER