Virtual Currency Hits The Indian Legal Turf: A Deconstruction of The Hon’ble Supreme Court’s Judgment in The Case Internet and Mobile Association of India Vs RBI

Abstract

This Article has attempted a deconstruction of the Hon’ble Supreme Court’s judgment in the case of Internet and Mobile Association of India (IMAI) v. Reserve Bank of India; which dealt the legality of the RBI circular dated April 06, 2018. This impugned Circular barred the regulated entities under RBI from providing any service pertaining to virtual currencies. In spite of upholding the legality and justifiability of pre-emptive counter-measures of RBI, the impugned Circular was struck down on the ground of absence of empirical evidence of damage to RBI regulated entities due to operations of virtual currency exchanges and for failing the test proportionality. The court while recognising the potential threat posed by VCs, did not lay down any guideline either to the RBI or to the Union Government for addressing issues involving virtual currencies. The Central Government, seized of the matter, is yet to finalise action to address the issues concerning operations of VCs in India. Thus, VCs continue to operate in India in a regulatory void.