India Supreme Court Rules In Favor of Cryptocurrency Trading, Lifts Ban

It’s finally the time to cheer for India’s cryptocurrency investors and enthusiasts! On Wednesday, March 4, a three-judge bench ruled in favor of the petitions filed by crypto startups and exchanges who demanded lifting the ban on crypto trading.

With this, India will be ending its two-year-long ban on cryptocurrency trading introduced by the India’s central bank - The Reserve Bank of India (RBI) - back in April 2018. The ban prevented all the regulated banks and financial institutions to get themselves associated with virtual digital currency service providers.

The RBI had reasoned its ban as move essential to curb “ring-fencing” of the country’s economic and financial system. Besides, the central bank also argued that Bitcoin or other public cryptocurrencies can’t be considered as currencies as they don’t exist in physical form.

The central bank’s decision back then caused several crypto exchanges to shut their shop or to set up their base outside the country. The only model on which crypto exchanges were allowed to operate was crypto-to-crypto trading or over-the-counter (OTC) trading.

This choked the influx of cash coming from banks to the exchanges thus getting retail players out of the game.

Finally, with today’s SC verdict, the Indian community is rejoicing calling this decision as “historic” as it ultimately brings clarity on this long pending issue.

It looks as if the RBI already saw this coming their way. In January 2020, the RBI said that it hasn’t explicitly banned virtual currencies. Rather it just asked financial institutions not to be associated with companies and businesses providing virtual currency services, said the central bank.

In today’s verdict, the bench, also comprising justices Aniruddha Bose and V Ramasubramanian said: "Accordingly, the writ petitions are allowed and the circular dated April 6, 2018, is set aside. When the consistent stand of RBI is that they have not banned VCs (virtual currencies) and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate”.

On the other hand, looking to all the global developments, the Indian central bank has decided to work on its own central bank digital currency (CBDC) aka the Digital Rupee. The bank said that it plans to leverage the use of blockchain technology for instant payments settlements.