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.
GOVIND
GUPTA
ASSOCIATE
THE
INDIAN LAWYER