The Reserve Bank of India (RBI) on Friday told the Supreme Court that it is necessary to regulate the Bitcoin and other cryptocurrencies to check illegal transactions which will impact the international flow of funds.
The RBI told the bench of Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud that its stand is of extreme caution as it has severe policy implications. Appearing for the RBI, senior counsel Shyam Divan said they have a particular stand and other departments may have other positions.
Cryptocurrencies 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”.
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 till September 11. The apex court had also sought the assistance of Attorney General K.K. Venugopal in the matter.
Some petitions challenged the use of cryptocurrencies 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 cryptocurrencies.
While few other petitions have challenged the RBI notification issued on April 6 on “Prohibition on dealing in Virtual Currencies”.
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.
The RBI statement in April had said:
“We have now decided to fence RBI-regulated entities from the risk of dealing with entities associated with virtual currencies. They are required to stop having a business relationship with entities dealing with virtual currencies forthwith, and unwind the existing relationship within three months. “Virtual currencies, also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.”
The RBI, however, also said it is exploring a “fiat digital currency”
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