Crypto Bitcoin Virtual Currencies are Legal in India? | Advocate Paresh M Modi

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Crypto – Bitcoin- Virtual Currencies are Legal in India? | Advocate Paresh M Modi

The Reserve Bank of India (RBI) issued a circular on April 6, 2018, titled “Prohibition on dealing in Virtual Currencies (VCs).” This circular imposed restrictions on entities regulated by the RBI from dealing with or providing services to individuals or businesses dealing with or settling virtual currencies, including Bitcoin.

Key Points of the RBI Circular (April 6, 2018):

  1. Prohibition on Regulated Entities: The circular directed all entities regulated by the RBI, including banks, to stop providing any services related to virtual currencies. This included:

– Maintaining accounts

– Registering, trading, settling, clearing, giving loans against virtual tokens

– Accepting them as collateral, opening accounts of exchanges dealing with them, and transferring/receiving money in accounts relating to the purchase or sale of virtual currencies.

  1. Timeline for Compliance: The regulated entities were given a period of three months to end their relationships with individuals or businesses dealing in virtual currencies.
  2. RBI’s Concerns: The RBI cited concerns over consumer protection, market integrity, and money laundering as reasons for the restrictions. The bank was apprehensive about the risk posed by the unregulated nature of cryptocurrencies and their potential use in illegal activities.

Impact:

This circular effectively cut off banking support to cryptocurrency exchanges and traders in India, severely impacting their operations. The lack of access to banking services made it difficult for these entities to facilitate transactions in cryptocurrencies.

 

Supreme Court Decision:

On March 4, 2020, the Supreme Court of India struck down this RBI circular in the case of Internet and Mobile Association of India v. Reserve Bank of India. The Court ruled that the circular was unconstitutional and disproportionate, allowing banks to resume providing services to individuals and businesses dealing in cryptocurrencies.

Current Status:

While the RBI circular is no longer in effect, the Indian government has expressed its intent to introduce a regulatory framework for cryptocurrencies. However, as of now, no specific law or regulation has been enacted regarding the legal status of cryptocurrencies in India.

If you need the exact text or more detailed excerpts from the circular, I can assist with that as well.

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Author: Advocate Paresh M Modi

As a law firm, Advocate Paresh M Modi is having a team of expert Advocates who provide expert advice and guide the clients on the complicated issues of court proceedings in India. Our law firm has been advising clients to adopt a systematic approach as per the provisions of the law and the requirements of the statute. Being the Best Advocate in Ahmedabad, Advocate Paresh M Modi has been serving the clients according to the provisions of law as Advocate Paresh M Modi is an Experienced Lawyer in Gujarat.Paresh M Modi and his associates have been rendering excellent work owing to their experience in Gujarat High Court for more than 7 years together and having established themselves as a seasoned advocate in the High Court of Gujarat by dealing with various matters in a different fields. It has been made possible to see that the client in any corner of the State of Gujarat could get genuine legal advice and the presence of a lawyer on account of the association with Advocates in various cities of the State of Gujarat.

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