SC:Don’t Entertain Petitions against RBI’s Circular Barring Investment in Virtual Currencies

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May 25, 2018

In a case (Siddarth Dalmia & anr. v. Union of India & Ors.) recently taken up by Three-Judge Bench of Supreme Court headed by the Chief Justice Dipak Misra, the Apex Court has directed the High Court not to entertain any petition relating to Reserve Bank of India’s Circular on “Prohibition on Dealing in Virtual Currencies” dated April 06, 2018.

The RBI’s Circular can be accessed here.

Here it would be pertinent to mention that the RBI in the Circular prohibited the entities regulated by the RBI to not deal in Virtual Currencies including Bitcoins or provide services for facilitating any person or entity in dealing with or settling VCs like 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.

Even in December last year, the RBI had cautioned customers from investing in Virtual Currencies. The press release cautioned users, holders and traders of VCs including Bitcoins regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with such VCs (read RBI Cautions on Risks of Trading in Virtual Currencies including Bitcoins).

Pursuant to RBI’s circular barring entities from dealing in VCs, petitions had been filed for scrapping the Circular and the Delhi High Court had also issued notice to RBI in this context.

However, the Apex Court has now barred the High Courts from entertaining any such petition against the impugned Circular.

The Supreme Court’s order can be accessed here.