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Regulate cryptocurrency to curb illegal transaction: RBI to SC
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SME Times News Bureau | 21 Jul, 2018
The Reserve Bank of India (RBI) on Friday told the Supreme Court that
it is necessary to regulate the Bitcoin and other cryptocurrencies to
check illegal transactions which will impact the international flow of
funds.
The RBI told the bench of Chief Justice Dipak Misra,
Justice A.M. Khanwilkar and Justice D.Y. Chandrachud that its stand is
of extreme caution as it has severe policy implications.
Appearing
for the RBI, senior counsel Shyam Divan said they have a particular
stand and other departments may have other positions.
Divan told
the court that a committee is looking into the issue and as such RBI
will require three weeks time to respond to various petitions seeking
such regulations.
The senior counsel was referring to an
interdisciplinary committee headed by secretary of economic affairs
Subhash Garg that was set-up in 2017 to examine virtual currencies and
recommend the regulatory framework for crypto currencies.
The Court was hearing a plea against RBI circular banning bank dealings in cryptocurrencies.
The
top court slated the next hearing for September 11 as senior counsel
Gopal Subramanium told the Court that matter is serious and needed to be
heard and decided at the earliest.
Subramaium said, "In today's
tech world, transactions are done online and you need banks for that"
and that should concern the government.
Subramanium described as
"baseless" the RBI circular that mandated its regulated entities
including banks to withdraw support for crypto urrency exchanges and
other businesses dealing with virtual currencies.
In a bid to
protect consumers and curb money laundering and other financial
irregularities, the RBI had, on April 5, barred all its regulated
entities, including banks, from dealing in virtual currencies like
bitcoins, following its earlier multiple warnings on their risks.
Regulated
entities already providing services to any individual or business
dealing in digital currencies had been given three months to exit the
relationship.
Cryptocurrency trade in rupees stopped on July 6 ,
while exchanges or cryptocurrency companies will now be unable to avail
loans or hold bank accounts.
The RBI statement in April had said:
"We have now decided to fence RBI-regulated entities from the risk of
dealing with entities associated with virtual currencies. They are
required to stop having a business relationship with entities dealing
with virtual currencies forthwith, and unwind the existing relationship
within three months.
"Virtual currencies, also variously referred
to as cryptocurrencies and crypto assets, raise concerns of consumer
protection, market integrity and money laundering, among others."
The RBI, however, also said it is exploring a "fiat digital currency" issued by the Central bank.
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