Supreme Court Refuses to Lift Ban on Cryptocurrencies

The RBI prohibited banks and financial institutions from providing service related to cryptocurrencies on 6 April.

Tightening the rules to discourage the use of virtual currencies like Bitcoin, RBI has plans for its own cryptocurrency.

(Photo: iStock)

The Supreme Court on Tuesday declined to offer interim relief on the RBI restrictions on dealing in cryptocurrencies, The Economic Times reported.

The RBI had prohibited banks and financial institutions from providing any service related to cryptocurrencies in a circular dated 6 April.

The circular bars entities regulated by the RBI from "providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to purchase or sale of virtual currencies".

Earlier, the apex court had ruled that all dealings related to cryptocurrencies be clubbed together and had fixed a 20 July hearing for the case. The case was advanced as an industry body said the RBI ban will come into effect next week. The Supreme Court hence set the hearing for 3 July.

According to the report, people might face problems converting their cryptocurrency after 5 July. Zebpay, India's most widely known crypto-exchange in India, has also asked people to withdraw before the deadline.

The website says:

As per a recent RBI action, banks have been told to discontinue banking services to those dealing with virtual currencies. While our industry is challenging this legally, the outcome is beyond our control. Hence, if you are holding any rupees, or depositing any rupees in Zebpay, there could soon come a time when we may be not be able to honor withdrawal requests. Please continue only if you understand this risk.

Zebpay statement

This has been the most significant development towards the situation of cryptocurrencies in the country and can be seen as the first step towards a crackdown on cryptocurrenies.

(With inputs from The Economic Times)