SC upholds RBI circular prohibiting banks and financial institutions from providing services in cryptocurrencies

New Delhi: The Supreme Court on Tuesday refused to stay a Reserve Bank of India (RBI) circular prohibiting banks and financial institutions from providing services in relation to cryptocurrencies. A bench headed by Chief Justice Dipak Misra issued notices to the ministries of finance, law and justice and information technology and the RBI and tagged the matter along with similar cases. [caption id=“attachment_4656111” align=“alignleft” width=“380”] Representational image. Reuters[/caption] According to the 6 April circular, the entities regulated by the RBI are prohibited from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies". Cryptocurrencies are digital currencies, in which encryption techniques are used to regulate the generation of the currency units and verify the transfer of funds, operating independently of a central bank. The top court was hearing a plea filed by Internet and Mobile Association of India seeking a stay on the RBI circular claiming it was “arbitrary, unfair and unconstitutional”. The association has contended that the RBI circular has barred all the entities regulated by the apex bank from providing services to any individual or business dealing in virtual currencies like cryptocurrencies.