The cryptocurrency fever might have ebbed in the past few years; however it looks like it might spike right up soon.
The Supreme Court of India today has permitted transaction /trading in cryptocurrencies -- quashing a circular issued by the Reserve Bank of India (RBI) in 2018 that banned the aforementioned transactions.?
The judgement was rendered by the Bench of Justices Rohinton Nariman, S Ravindra Bhat and V Ramasubramanian.?
In case you didn¡¯t know, Cryptocurrencies are digital currencies in which encryption techniques are used to regulate the generation of currency units and verify the transfer of funds, operating independently of a central bank.?
One of the most common ways of earning cryptocurrency is through cryptocurrency mining, where people give their computer¡¯s processing power in exchange for bitcoins or other kinds of cryptocurrency. With the transactions being encrypted, they cannot be tracked and it reaches the recipient without any trace.?
The circular banned banking and financial institutions from dealing in virtual currencies/ cryptocurrencies like Bitcoin. According to RBI, virtual currencies raise concerns of consumer protection, market integrity and money laundering, and amidst these concerns, it stopped institutions from accepting them.
This circular was challenged by the Internet and Mobile Association of India. They stated that Bitcoins were to be treated like a commodity and not a currency, as the name suggests. They further contended that it is similar to casino chips and not actual currency.
RBI also clarified that with its circular it didn¡¯t intend to ban cryptocurrency across the country, but imposing its ban on banking services fit right in its domain.
Petitioners further argued the fact that trading in cryptocurrencies in the absence of a law banning those was a ¡®legitimate¡¯ business activity under the Constitution of India, and RBI couldn¡¯t have denied them access to banking channels to carry out such business. Moreover, banning cryptocurrency from the formal economy would only spike its transactions through the black market.?
This means we can now invest in bitcoins if we wish to. Moreover, we can also expect financial institutions to bring in methods to accept bitcoins as a form of currency.
Imagine payment gateways where instead of adding card details, you add your bitcoin account details. Banks could also create trading of bitcoin more streamlined with RBI¡¯s curb quashed.