The Reserve Bank of India (RBI) on Friday told the Supreme Court that allowing dealings in crypto currencies like Bitcoins would encourage illegal transactions and it has already issued a circular prohibiting use of these virtual currencies.
Crypto currencies are “a stateless digital currency” in which encryption techniques are used for trading and these ‘currencies’ operate independently of a central bank like the RBI, “rendering it immune from government interference”.
A bench headed by Chief Justice Dipak Misra was informed by senior advocate Shyam Divan, appearing for the RBI, that a committee has been set up by the Centre to deal with the issues relating to crypto currencies and the matters required a final and early decision from the top court.
The federal bank and the central government 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.
The bench granted time to the Centre and the RBI for filing responses and fixed the petitions for final hearing on September 11.
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.
They also sought a direction to the Centre to take emergent steps to restrain the sale and purchase of illegal crypto currencies.
The apex court had also sought the assistance of Attorney General K K Venugopal in the matter.
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.