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Twitterati Rejoice as Indian Supreme Court Reverses Ban on Use of Bitcoin, Cryptocurrencies

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New Delhi (Sputnik): In April 2018, the apex Reserve Bank of India (RBI) declared that no banks would deal with cryptocurrencies and bitcoins, citing concerns of online fraud, money laundering, and protection of people dealing in virtual currencies. Since then, the roll-out of crypto assets in India has faced a major setback.

Cryptocurrencies are encrypted digital currencies used to monitor the generation of actual currency units and verify monetary transactions online.

After almost two years of an RBI ban on digital currencies, the Supreme Court of India has permitted the use and circulation of cryptocurrencies in the country, providing a long overdue sigh of relief for the banking sector. The decision to strike down the RBI ban was pronounced by a three-judge bench chaired by Justice Rohinton Nariman.  

​In 2019, the New Delhi-headquartered industry body - Internet and Mobile Association of India (IAMAI) challenged the RBI’s ban on cryptocurrencies in the Supreme Court, where IAMAI accused the RBI of not conducting any analysis before banning the use of digital money on “moral grounds”.

At the time, the IAMAI produced a statement by the RBI given in response to a Right to Information (RTI) filing where the apex bank had accepted that no study or committee was included to research the pros and cons of the use of cryptocurrency before the ban was imposed.

The RBI, in its arguments before the Supreme Court judges, highlighted that their decision was made to keep the country’s financial transaction system from being exposed to risks.

Following the verdict, #IndiaWantsCypto, #Cryptocurrency, and #Bitcoins have been trending on Twitter. 

​The decentralised peer-to-peer digital currency called Bitcoin first came into existence back in 2009, which was followed by the age of cryptocurrencies.

Cryptocurrencies including Bitcoin are not issued or regulated by a particular bank, instead they are created on computer systems through a process called “mining”.

These digital currencies are capable of facilitating cross-border financial dealings without any kind of exchange rates. However, cryptocurrency-based transactions also offer an option of anonymity to the parties involved in the process. At present, there are no defined legislatures to regulate the do's and don'ts while dealing in cryptocurrencies.

While countries like the US, Canada, and Australia allow the mining and use of Bitcoin, other countries like Russia, China, and Vietnam are still not on board with the idea.

The Supreme Court’s decision to lift the ban on trading in virtual currencies comes almost a month after the National Institute for Smart Governance (NISG), a government promoted public-private body, submitted its first draft of India's future blockchain policy and invited suggestions from experts and stakeholders.  

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Since blockchain is also used for cryptocurrency-based transactions, in its draft, the NISG has suggested that the RBI must roll out a special "Central Bank Digital Rupee (CBDR)" that would support non-government applications monitored over a public permissible blockchain system.

In addition, the de-banning of cryptocurrencies also appears to be another nudge to Indian citizens, whom the government is pushing to adopt more and more digital ways of living.

As part of its “Digital India” initiative, the government is encouraging people to explore the daily use of multi-functional internet srvices and gadgets.

After Prime Minister Narendra Modi de-monetised larger currency notes overnight back in 2016, India witnessed an escalated adoption rate of online transactions facilitated by apps and Unified Payments Interface (UPI).

The mobile-only UPI is an instant real-time payment system regulated by the RBI. It allows India's 493 million internet users to process immediate inter-bank money transfers.

Since being launched in 2016, the system has seen transactions worth $19 billion through March 2019.

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