In Brief
The Supreme Court struck down the Reserve Bank of India's April 2018 circular prohibiting banks from providing services to virtual currency exchanges. While holding that RBI has statutory power to regulate virtual currencies as they may impact monetary systems, the Court found the blanket disconnection from banking channels disproportionate under Article 19(1)(g). RBI failed to demonstrate actual harm to regulated entities, did not consider less intrusive alternatives like targeted restrictions on anonymous cryptocurrencies, and the measure effectively prohibited an activity not declared unlawful. The Court set aside the circular and directed RBI to release frozen funds of one petitioner's company.
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