Virtual Currency: SC lifts Ban on its trading
Part of: GS Prelims and GS-III- Awareness in IT; GS-II- Governance
- The ban on trading in Virtual Currencies was imposed by RBI
- There is no globally accepted definition of what exactly is virtual currency.
- Basically, virtual currency is the larger umbrella term for all forms of non-fiat currency being traded online.
- Virtual Currencies are mostly created, distributed and accepted in local virtual networks.
- Virtual currency also includes Cryptocurrencies that have an extra layer of security, in the form of encryption algorithms
- Most cryptocurrencies now operate on the blockchain or distributed ledger technology, which allows everyone on the network to keep track of the transactions occurring globally.
Key Highlights of the Judgement
- The court found the ban did not pass the “proportionality” test.
- The test of proportionality of any action by the government must pass the test of Article 19(1)(g), which states that all citizens of the country will have the right to practise any profession, or carry on any occupation or trade and business.
- Besides, RBI had not considered the availability of alternatives before issuing the order i.e. achieving the same objective by imposing a less drastic restraint.
- Till date, the RBI has not come out with a stand that any of the entities regulated by it have suffered any loss or adverse effect directly or indirectly, on account of VC exchanges.