The legal status of cryptocurrencies within India has become questionable of late. With so many speculations flying around as regards the legal status of crypto-related businesses operating in India. The country’s Supreme Court has called on the Government Authorities to clarify once and for all its official position on the matter.
Supreme Court of India
Based on a recent report the Supreme Court of India has communicated with the Indian Government through its official channels, asking for a clarification on its position regarding cryptocurrencies. The court has also ordered that a response must be given within two weeks.
It was reported that the legal status of cryptos in India came under threat as a result of a circular issued by the Reserve Bank of India on April 6th, 2018. The circular made it clear that the bank has placed a ban on any kind of trade in cryptocurrencies. This is despite the fact that there are no law tagging cryptos as illegal.
The RBI Circular
The circular titled “Prohibition on dealing in Virtual Currencies (VCs)” stated that within three months, any activity related to cryptocurrencies had to end.
The content of the circular stated that:
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by the reserve bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/ sale of VCs.”
The document further stated that:
“regulated entities which already provide such services shall exit the relationship within three months from the date of this circular.”
Following the release of this circular, a report made it known that the India Supreme Court, held a setting to decide on the generality of the cases. Based on the report, the court ruled to deny the stay of execution of RBI’s notification.