SC directs HCs not to entertain pleas on RBI circular on virtual currencies

May 18, 2018 08:49 IST
SC directs HCs not to entertain pleas on RBI circular on virtual currencies

The Supreme Court on May 17, 2018 barred all the high courts from listening to any plea related to an RBI circular that prohibited dealings in virtual currencies such as the Bitcoin.

The ruling was passed by a three-judge bench comprising Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud. The bench gave the direction while hearing to pleas seeking direction to the Centre to take immediate steps to restrain the sale and purchase of illegal crypto currency or virtual currency like Bitcoin.

SC’s ruling: Key Highlights

The court directed that no High Court shall entertain any petition relating to RBI circular dated April 6, 2018 on 'Prohibition on dealing in virtual currencies'.

In a circular on April 6, RBI had directed all the banks and financial institutions to freeze the bank accounts of those individuals and companies dealing in the illegal trade of virtual currencies.

Besides, the bench also granted liberty to one of the petitioners to submit a representation to the competent authority in RBI within two weeks so that it could be dealt with in accordance with law.

The court also dealt with two petitions seeking transfer of pleas pending before the high courts of Delhi and Calcutta.

The court also sought the assistance of Attorney General K K Venugopal in the matter.

The top court has posted the matter for further hearing on July 20.

What are crypto currencies?

 SC directs HCs not to entertain pleas on RBI circular on virtual currencies

• Crypto currencies are a type of digital or virtual currencies that use cryptography for security. This security feature makes it difficult to counterfeit them.

• These currencies operate independently of a central bank like the RBI, rendering them immune from government interference or manupulation.

• The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.

• Bitcoin, created in 2009, was the first decentralized cryptocurrency. Since then, over 1,800 cryptocurrencies have been created.

Background

Petitioners, in their plea, sought a direction to the Centre to take steps to restrain sale and purchase of illegal crypto currencies like Bitcoins, which were being traded openly for illegal activities like funding terrorism and insurgency.

The plea also sought direction to the Centre to declare as illegal and ban all illegal virtual currencies, crypto currencies or decentralised digital such as Bitcoins, litecoins, bbqcoins, dogecoins and investigate and fix accountability on the sale and purchase of virtual currencies till date and prosecute the offenders.

It also sought to declare as illegal and ban all websites, web links and mobile applications that were being used to buy, sell or deal in any manner with illegal virtual currencies.

Lastly, it sought a direction to the government to give advertisements and wide publicity through media informing and educating the public in India about the illegalities involved in sale, purchase and dealing of illegal virtual currencies.

 

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