India has been on the fence on cryptocurrencies for long, gradually making up its mind to whether accept or reject digital currencies.
An inter-ministerial panel on cryptocurrency, chaired by Secretary (Economic Affairs), to study the issues related to virtual currencies and propose specific actions has already submitted its report. It has recommended that all private cryptocurrencies, except any virtual currencies issued by state, will be prohibited in India.
The Reserve Bank of India (RBI) has also raised concerns on the cryptocurrencies traded in the market and conveyed them to the Centre.
RBI Governor Shaktikanta Das had emphasised that there are no differences between the central bank and the Finance Ministry on cryptocurrencies. He had said he has "reasons to believe" that the government is in agreement with the "major concerns" flagged by the RBI about the cryptocurrencies.
"We should now await the final decision on the matter" from the Centre, he had added.
Back in March, the Supreme Court had allowed banks and financial institutions to reinstate services related to cryptocurrencies by setting aside the RBI's 2018 circular that had prohibited them.
Cryptocurrencies are digital or virtual currencies in which encryption techniques are used to regulate the generation of their units and verify the transfer of funds, operating independently of a central bank.
A three-judge bench, headed by Justice R F Nariman, said the Reserve Bank of India (RBI) circular is liable to be set aside on the ground of "proportionality".
"Accordingly, the writ petitions are allowed and the circular dated April 6, 2018 is set aside," said the bench, also comprising justices Aniruddha Bose and V Ramasubramanian.
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