Since man evolved currency has been evolved and is very important part of
society. Currency has been an integral part of our lives. In Ancient era, we
used barter system meaning we did exchanged money in form of goods and services
amongst each other. But, barter system lost its impact within few decades. After
realizing barter system didn't work, modern currency ( which we use) came into
History of currency
- In 110 BC, an official currency was introduced minted.
- 1250 ad, gold plated florins were introduced in Europe
- 1600ad -1900 ad paper currency gained popularity.
- Modern currency includes (credit debit cards, paytm, google pay etc)
The currencies are controlled by Banks and Government.
cryptocurrency (or crypto currency) is a digital asset designed to work as
a medium of exchange wherein individual coin ownership records are stored in a
digital ledger or computerized database using strong cryptography to secure
transaction record entries, to control the creation of additional digital coin
records, and to verify the transfer of coin ownership. It typically does not
exist in physical form (like paper money) and is typically not issued by a
central authority. Some cryptocurrencies use decentralized control as opposed to
centralized digital currency and central banking systems.
When a cryptocurrency is minted or created prior to issuance or held on a centralized
exchange, it is generally considered centralized. When implemented with
decentralized control, each cryptocurrency works through distributed ledger
technology, typically a blockchain, that serves as a public financial
Bitcoin, first released as open-source software in 2009, is the first
decentralized cryptocurrency. Since the release of bitcoin, over 6,000 altcoins (alternative
variants of bitcoin, or other cryptocurrencies) have been created.
Cryptocurrency is a digital or virtual currency which is meant to be a medium of
exchange. Cryptocurrenceis to secure financial tran Supreme Courtations, crontol
creation of addition units, and verify the transfer of assets. Cryptocurrencies
are used to decentralize control as to oppose centralize digital currency and
central banking system. The decentralized control of each currency works through
a disturbed ledger technology, typically a blockchain, which serves as public
financial tran Supreme Courtations database.
Blockchain is basically the record of the tranSupreme Courtations done by the
users which are linked and secured using cryptography. It is similar to real
world currency it does not have any physical embodiment. It alsoused
cryptography to work the way it does. It is called blockchain via which we are
able to generate/access the cryptocurrency.
Biticion is a type of currency which was the first to be released as open source
in 2009. It is generally considered the first decentralized cryptocurrency. It
allows users to interact with each other but not with real life accounts.
Types of cryptocurrency:
- Altcoins (alternative cryptocurrency coins)
- Litecoin (LTC)
- Monero (XMR)
- EOS (EOS)
Some features of cryptocurrency
The main features of cryptocurrencies are that they are trustless, immutable and
In India, after the launch of Bitcoin a number of cryptocurrency exchanges began
to operate. But they were working in what was really a regulatory vacuum. There
was not only no clear definition of what a cryptocurrency was but there was also
no law that prohibited or regulated their use. This situation prevailed until
April 2018, when the Reserve Bank of India issued a circular, not banning the
use of crypto currencies themselves, but the provision of banking services to
any person who dealt with such currencies.
Supreme Court Verdict
Internet and mobile association of India v. Reserve Bank of India
In a 180-page long judgment, authored by Justice V Ramasubramanian, the Court
Obeserved that while the RBI has the power to regulate Virtual Currencies, the
prohibition imposed through the April 2018 circular is disproportionate, and,
therefore, ultra vires the Constitution. 
According to the Court, the RBI's circular, in imposing a wholesale moratorium
on the provision of banking services to these dealers, unreasonably impinged on
what is otherwise a valid vocation, by going beyond the limitations permitted
under Article 19(6). 
In 2018 a circular was passed by Reserve Bank of India. It banned banks from
dealing with Virtual Currency exchanges and individual holders on the grounds
that these currencies had no underlying fait. Reserve Bank of India held that it
was necessary in public interest.
Hon'ble supreme court set aside April 6, 2018 circular issued by Reserve Bank of
India prohibiting banks and financial institutions from providing services in
relation to cryptocurrencies. The court found that the prohibitive circular is
Reserve Bank of India argued that the decision was taken to prevent cryptocurrency
industry from affecting payment service in India. The circular was challenged by
Internet and mobile association of India and argued India has consumer
protection and anti - money laundering laws which could be applied to virtual
currencies rather than banning them. Reserve Bank of India argued they do not
want these virtual currencies to spread like a contagion and had therefore, in
larger public interest asked banks not to deal with people or exchange dealing
with these non- fiat currencies.
Further, contentions by the petitioner, any trade in the cryptocurrency was not
illegal within the ambit of the Constitution of India. The ban would remove
cryptocurrency trade from the formal economy and it may get traded through
illegal routes or hawala( can be considered going into the black market).
Further, pleaded the trade and dealing which takes place is not illegal and is
legitimate business activity. The assets are classified as commodity (Virtual
Currency) not as currency so, anyways it doesnot come under the jurisdiction of
Reserve Bank of India. Hon'ble Court observed that the ban imposed by Reserve
Bank of India did not pass the “test of proportionality” of any action by the
Government. The Court held that the it must pass the test of Article 19 (1)(G)
which states that all citizens of the country will have right to practice any
profession or carry on any occupation or trade and business.
Court observed every court which attempted to fix the identity of virtual
currency merely acted as the 4 blind men in the Anekantavada which is philosophy
of Jainisim, who attempt to describe an elephant but end up describing only one
physical feature of elephant. Similarly, with bitcoin (of Virtual Currency) .
Court indicated that the central bank should have opted for a less invasion
mechanism to control the pitfalls of cryptocurrency. Virtual Currency is
umbrella term for all forms of non -fiat currency. Virtual Currency mostly are
created, distributed and accepted in local virtual networks. Cryptocurrencies
have extra security in form of algorithms. Even if a blanket ban of any sort
could push the entire system underground which in turn would mean no regulation.
Impact of the decision
The crypto community has hailed the top court decision, and it could be
game-changer for many startups and crypto exchanges who have either closed their
operations or shifted their base from the country. It could lead to Reserve Bank
of India rethinking its policies surrounding Virtual Currency.
Reserve Bank of India will reconsider its approach to cryptocurrency and come up
with a new, calibrated framework.
Written By: Shivani Vora