Crypto Currencies Encourage Illegal Dealings: RBI Tells SC

Pointing out that transaction with crypto currency could “encourage illegal transactions” in the country, the RBI has told the Supreme Court that a committee has been set up by the Centre to go into its eventual validity.

“We have already issued a circular prohibiting use of these virtual currencies”, senior advocate Shyam Divan who appeared for the RBI told a bench of chief justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud on Friday.

Hearing was on PILs filed by an advocate Dwaipayan Bhowmick and a law student Siddharth Dalmia which sought setting up of a panel to frame a mechanism to regulate the flow of Bitcoin.

RBI wanted to file a detailed affidavit .The federal bank and the central government meanwhile also sought three weeks time from the bench, which also comprised justices A M Khanwilkar and D Y Chandrachud, for filing their responses to a clutch of petitions on the issue.

Some petitions challenged the use of virtual currencies and alleged that they posed grave dangers to the traditional economy. and they also sought framing of guidelines to regulate them.

SC on May 17 had transferred to itself the petitions pending in various high courts on virtual currencies and barred them from entertaining any plea in future relating to an RBI circular prohibiting dealings in such currencies.

On November 16 last year Supreme Court had sought the response of the Centre on the petition seeking regulation of the flow of Bitcoin (Crypto Currency) and wanted that the virtual currency be made accountable to the exchequer.
Notices went to ministries of Finance, Law and Justice, Information Technology, market regulator SEBI and the RBI.

Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.

“It is submitted that money used to buy Bitcoin (crypto money) from foreign locations is completely untraceable and may be used for trading and various other financial activities directly from crypto currency accounts without any accountability. It is pertinent to mention herein that such trades affect the market value of other commodities inevitably”, said the plea.