In the era where technological advancements are happening at an exponential rate, the
Fintech sector has found itself at the forefront of this boom. From mobile banking and online
stock trading platforms to unequivocally the most coveted one – cryptocurrency. The
popularity of Virtual Currencies (“VCs”) such as Bitcoin, Ethereum, etc. has considerably
increased in the recent past – globally and in India. As per some media reports, the three
largest crypto-exchanges in India – WazirX, Unocoin and CoinDCX – claim that there are
anywhere between 60 lakhs to one crore cryptocurrency holders in the country with holdings
of over Rs 10,000 crore. Further, the growth potential of this sector was highlighted in a
Nasscom and KPMG Report which estimated that transactions in the Indian fintech sector
(FinTech) grew 121% from 2018 to 2020 and India’s GDP will increase from FinTech by an
additional $730 million by 2025.

In India, the apex financial authority i.e., the Reserve Bank of India, has
understood cryptocurrency as a form of digital/ virtual currency generated through a series of
written computer codes that rely on cryptography which is encryption and is thus independent
of any central issuing authority per se. It is facilitated through blockchain technology and has
emerged as a person-to-person issuance and transaction system that uses private and public
keys that enable authentication and encryption for secure transactions. A cryptocurrency is a
medium of exchange that is, encrypted, decentralized and digital. There is no central
authority to determine the value of cryptocurrency. Instead, the value of cryptocurrency is
determined by its customers over the internet. Cryptocurrency functions through the network,
where a large number of computers are employed, which is why cryptocurrency is not
confined to the hands of a government authority or central authority.

Being an untapped, unregulated market with a capability of over a trillion dollars, India also
saw a massive surge of cryptocurrency exchanges. Witnessing the massive popularity of the
crypto market, its usage within a year, and potential revenue loss the Government of India,
the regulators and authorities began to take notice and as a consequence, in 2013 the Reserve
Bank of India (“RBI”) issued a press release, cautioning the public against dealing in virtual
currencies including Bitcoin. In November 2017 the Government of India constituted a high-level Inter-Ministerial Committee to report on various issues pertaining to the use of virtual
currency and subsequently, in July 2019, this Committee submitted its report recommending
a blanket ban on private cryptocurrencies in India.


At the beginning of April 2018, the RBI issued a circular preventing all commercial and co-
operative banks, small finance banks, payment banks and NBFC from not only from dealing in virtual currencies themselves but also directing them to stop providing services to all
entities which deal with virtual currencies. This essentially broke down the crypto industry as
exchanges needed the banking services for sending and receiving the money necessary for
converting it into cryptocurrency and for paying salaries, vendors, office space etc. However,
the circumstances prevailing around cryptocurrencies and their usage completely changed on
4th March 2020, when the Apex court of India i.e., Hon’ble Supreme Court of India, in a
well-conceived judgment passed a decision quashing the earlier ban imposed by the RBI. The
Hon’ble Supreme Court of India predominantly examined the matter from the perspective of
Article 19(1)(g) of the Indian Constitution, which specifies the freedom to practice any
profession or to carry on any occupation, trade or business, and the doctrine of
The pattern of reluctance exhibited by India is evident through the series of either cautionary
or prohibitory circulars issued by the Reserve Bank of India (“RBI”). An Inter-Ministerial
Committee was also formed which proposed two bills which were, in essence, contrary to
each other. The RBI has maintained that there is a high risk of money laundering, terror
financing, hacking and frauds. However, the Hon’ble Supreme Court in 2020, passed a landmark judgement that examined and interpreted the issue, giving a rather pro-
cryptocurrency perspective as opposed to the previous RBI circulars and Inter-Ministerial Committee bills.
In 2017, the RBI has released a press release stating that it has not given any license or
authorization for dealing in cryptocurrencies in India, and the customer must be aware of the
risks while trading in them.

On 6th April, 2018, the RBI issued a circular which cut-off the access to banking channels by
cryptocurrency traders and exchanges. The circular provided an inclusive list of services that
would be covered under the prohibited conduct. The list included- “maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as a
collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in
accounts relating to purchase/sale of VCs.”

The 2018 circular was challenged before the Supreme Court and a writ petition was filed by
the Internet and Mobile Association of India and other companies running cryptocurrency

The tide shifted when the Hon’ble Supreme Court on March 4, 2020 in Internet and Mobile
Association of India V. Reserve Bank of India 13 (“Judgement”), with a three-judge bench
comprising of Justices Rohinton Nariman, Aniruddha Bose and V. Ramasubramanian, lifted
the ban imposed by the RBI Circular. The court predominantly examined the matter from the
perspective of Article 19(1)(g) of the Indian Constitution, which is the freedom to practice
any profession, or to carry on any occupation, trade or business, and the doctrine of

Cryptocurrency and Regulation of Official Digital Currency Bill, 2021
The Parliament, in the next Lok Sabha session, is proposing to introduce the Cryptocurrency
and Regulation of Official Digital Currency Bill, 2021 (“New Bill”). The New Bill seeks to
create a facilitative framework for creation of the official digital currency to be issued by the
RBI. The New Bill also seeks to prohibit all private cryptocurrencies in India. However, it
allows for certain exceptions to promote the underlying technology of cryptocurrency and its

While the New Bill takes due cognizance of what has been a long-standing grey area in VC
laws and fosters the advent of digitalization, it proposes to ban private cryptocurrencies in its entirety. The RBI has time and again, laid emphasis on the possible misuse of VCs for terror-
financing, money laundering etc. However, if the New Bill imposes a ban on private

cryptocurrencies, it can in fact lead to the formation of an underground market wherein
genuine investors may be forced to operate in unmonitored environments. Additionally, the
key goal of introducing a law is to facilitate a relatively safer technological environment for
dealing with VCs. However, as the state-owned cryptocurrency will be developed to perform
the same functions as other cryptocurrency, it will be exposed to the same risks too.
Therefore, even the introduction of a national digital currency may not substantially mitigate
the risk.

While the growth statistics of the crypto industry in India mirrors a healthy picture of its
settlement in the new future, doubts and misinformation also influence many to withdraw
themselves from trading crypto. Inadequate literacy about crypto is another major factor that
imposes resignation on cryptocurrency settlement in India. Some studies have revealed that
digital assets, mainly crypto and bitcoin are prone to security attacks. While this rumination
cannot be discarded as false, crypto start-ups and fintech dealing with crypto are striving to
overcome the drawbacks.

As we are in a generation where more and more technological advances are bound to take
place, each advancement will invariably entail certain threats. It is important to keep
upgrading the law to keep it consistent with modern developments. As pointed out in the
Judgement by the Supreme Court, there must be empirical data to justify the ban and
demonstrate an actual need for it – in the absence of which, there is a high possibility of a
multitude of litigations where the right granted under 19(1)(g) will be invoked again.
Therefore, the aim of any proposed law should be to circumvent the risks associated with
VCs through efficient regulation as opposed to a ban.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

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We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

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