RBI Tells Supreme Court About Crypto Currency Encourages Illegal Dealings

The Reserve Bank of India (RBI) today told the (SC) Supreme Court that allowing dealings in crypto currencies like Bitcoins and altcoins encourage illegal transactions and it has already issued a circular prohibiting use of these virtual currencies.

Crypto currencies are “a stateless digital currency” in which encryption techniques are used for trading and these ‘currencies’ operate independently of a central bank like the RBI, “rendering it immune from government interference”.

A bench headed by Chief Justice Dipak Misra was informed by senior advocate Shyam Divan, appearing for the RBI, that a committee has been set up by the Centre to deal with the issues relating to crypto currencies and the matters required a final and early decision from the top court.

The federal bank and the central government sought three weeks time from the bench, which also comprised justices A M Khanwilkar and D Y Chandrachud, for filing their responses to a clutch of petitions on the issue.

The bench granted time to the Centre and the RBI for filing responses and fixed the petitions for final hearing on September 11.

Some petitions challenged the use of virtual currencies and alleged that they posed grave dangers to the traditional economy. and they also sought framing of guidelines to regulate them. They also sought a direction to the Centre to take emergent steps to restrain the sale and purchase of illegal crypto currencies.

While few other petitions have challenged the RBI notification issued on April 6 on “Prohibition on dealing in Virtual Currencies”. Earlier, the apex court, on May 17, had transferred to itself the petitions pending in various high courts on virtual currencies and barred them from entertaining any plea in future relating to an RBI circular prohibiting dealings in such currencies.