SC asks HCs not to entertain pleas on RBI circular on virtual currencies
The Supreme Court today barred all high courts from entertaining any plea relating to an RBI circular prohibiting dealings in virtual currencies like the Bitcoin.
The apex court, which was hearing pleas seeking direction to the Centre to take emergent steps to restrain the sale and purchase of illegal cryptocurrencies or virtual currency like Bitcoins, also sought the assistance of Attorney General KK Venugopal in the matter.
Cryptocurrencies are "a stateless digital currency" in which encryption techniques are used for trading. These 'currencies' operate independently of a central bank like the RBI, "rendering it immune from government interference."
A bench of Chief Justice Dipak Misra and Justices AM Khanwilkar and DY Chandrachud was informed by the counsel for petitioners, Siddharth Dalmia and Vijay Pal Dalmia, that the Reserve Bank of India had issued a circular on April 6 on the issue.
The lawyer said the RBI, through the circular, had directed the banks and financial institutions to freeze the bank accounts of those individuals and companies dealing in the illegal trade of virtual currencies.
"It is further directed that no High Court shall entertain any petition relating to the circular ....dated April 6, 2018 issued by the Reserve Bank of India on 'Prohibition on dealing in virtual currencies'," the bench said and posted the matter for hearing on July 20.
The bench also granted liberty to one of the petitioners to submit a representation to the competent authorityinRBI 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.
Dalmia, in his plea, has sought a direction to the Centre to take steps to restrain sale and purchase of illegal cryptocurrencies like Bitcoins, which were being traded openly for "illegal activities" like funding terrorism and insurgency.
The petitioners said the RBI had in 2013 issued a cautionary advisory to the users, holders and traders of virtual currency about the "potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to".
Again on February 1 last year, the RBI, through a press release, had advised that it had not given any licence or authorisation to any entity or company to operate such schemes or deal with Bitcoins or any other virtual currency.
The plea said the Ministry of Finance has constituted an inter-disciplinary committee under the chairmanship of Special Secretary (Economic Affairs) to examine the regulatory framework with regard to virtual currency.
It alleged that the RBI "has shrugged aside its duty to conclusively take a stand either in favour or against the illegal virtual currencies like Bitcoins in the interest of people of India".
"A virtual currency like Bitcoin is a stateless digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank like the RBI, rendering it immune from government interference," it said.
The plea has sought direction to the Centre to declare as illegal and ban all illegal virtual currencies, cryptocurrencies or decentralised digital such as Bitcoins, litecoins, bbqcoins, dogecoins etc. and investigate and fix accountability on the sale and purchase of virtual currencies till date and prosecute the offenders.
It has also sought to declare as illegal and ban all websites, web links and mobile applications which were being used to buy, sell or deal in any manner with illegal virtual currencies.
It also 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.
