The Supreme Court has revoked the Reserve Bank of India (RBI) circular banning cryptocurrencies in banking transactions, ending a nearly two-year legal battle to get the virtual currencies reinstated in the country.
The Supreme Court delivered its decision this Wednesday after hearing the petition challenging the RBI's decision to ban the Cryptocurrency trade in India.
The Reserve Bank of India had imposed a ban on cryptocurrency trading in April 2018 that barred banks and other financial institutions from facilitating "any service in relation to virtual currencies."
We will not stop here"
At the time, RBI said the move was necessary to curb "ring-fencing" of the country's financial system. It had also argued that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor were they stamped by the government.
The central bank's ban came after months of scrutiny of digital currencies by financial regulators as well as the government, which compared them to "Ponzi schemes" and threatened to impose harsh regulations. The RBI gave Indian banks three months to sever ties with all entities dealing in virtual currencies.
However, now that the ban has been lifted, market experts have raised an alarm citing lack of regulation and framework under which virtual currency trade can be executed. They believe that cryptocurrency trade will be highly risky and highly volatile without regulation.
"India is a big market, but a lot of companies have kept away from the market," said Vincent Poon, vice president, Bithumb Global, one of the largest cryptocurrency exchanges in the world.
Regulations will clarify how much freedom cryptocurrency businesses and exchanges will have to operate in India. That's important for big global exchanges to make their entry into the market and for Indian startups to do well.