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Online Games Involving Money Now Banned in Karnataka

In a major setback to the Online Gaming platforms and all other gaming entities in Karnataka falling under the category of wagering or betting, the Karnataka Government on 5th October 2021 notified the Karnataka Police (Amendment) Act, 2021, (“Act”/”Amendment”) which prohibited all forms of online gaming involving a transfer of money.

The controversial legislation comes in the backdrop of the upcoming T20 World Cup involving a huge stake for online gaming companies, including MPL, Dream11, to name a few. Further, it is said to damage Bangalore/Karnataka’s position as the country’s start-up capital which houses about 92 gaming companies and employs over 4,000 persons. 

Key Amendments Made Through the Karnataka Police (Amendment) Act, 2021

The Amendment widened the scope of certain definitions under Section 2 of the Act. Some of the key amendments are:  

The definition of the term “Gaming” under Section 2(7) has been revised to include online games that involve “all forms of wagering or betting, including in the form of tokens valued in terms of money paid before or after issue of it, or electronic means and virtual currency, electronic transfer of funds in connection with any game of chance“.

Similarly, Section 2(11) that defines “Instruments of gaming” has been substantially expanded and now includes any article used or intended to be used as a subject or means of gaming, including computers, computer system, mobile app or internet or cyberspace, virtual platform, computer network, computer resource, any communication device, electronic applications, software and accessory or means of online gaming, any document, register or record or evidence of any gaming in electronic or digital form, the proceeds of any online gaming as or any winning or prizes in money or otherwise distributed or intended to be distrusted in respect of any gaming“.

The Amendment has also introduced a new Section 12(A) that defines “online gaming” as “games as defined in clause (7) played online by means of instruments of gaming, computer, computer resource, computer network, computer system or by mobile app or internet or any communication device, electronic application, software or on any virtual platform;

Further, Section 78 has been amended to criminalize activities related to opening certain forms of gaming centres and penalize anyone who opens, keeps or uses cyber cafes, computer resources, mobile apps, the internet, or any communication device as defined in the IT Act for online gaming. Offences under Section 78 have been made cognizable and bailable.

The Amendment has also increased the nature of, and scope of punishments for various offences. Offences under Section 78 and Section 87 of the Act that deals with gaming in public streets are punishable with imprisonment of up to six months or a fine of up to ten thousand rupees. 

Punishments under Section 79, which criminalizes keeping common gaming house, and Section 80, which criminalizes gaming in common gaming-house, have been increased to imprisonment of up to three years and a fine of up to one lakh rupees. 

Previously, Sections 79 and Section 80 did not apply to wager in games of pure skill. The Amendment removed this exception, bringing games of skill as well under the purview of the ban.

Judicial Stand on Similar Bans Placed on Online Gaming

Recently in the case of Junglee Games v. State of Tamil Nadu[1], the Madras High Court struck down the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, which was similar to the Amendment in Karnataka, holding that such a blanket ban was excessive and disproportionate and that it was violative of Article 19(1)(g) of the Constitution.

The Rajasthan High Court in Saahil Nalwaya v. State of Rajasthan and Ors. [2] held that online fantasy sports, which functions under the Charter for Online Fantasy Sports Platforms of the Federation of Indian Fantasy Sports, the self-regulatory body in the online fantasy gaming industry which we have discussed before, are protected under Article 19(1)(g) of the Constitution.

The Supreme Court in Avinash Mehrotra v. The State of Rajasthan[3], dismissed an SLP from a decision of the High Court of Rajasthan, thereby upholding the judgements of the Rajasthan High Court, the Punjab and Haryana High Court, and the Bombay High Court, that games such as Dream11 do not involve any commission of the offence of gambling and betting.

Considering these judicial stands, the constitutional and legal validity of the Amendment is also in question, and the Amendment will likely be challenged in Court.

 

Effects of the Amendment Banning Online Gaming in Karnataka

Immediately after the Amendment Act was notified, Online platforms started geotagging and blocking access to their apps for users in Karnataka. While MPL and PayTM First seem to have blocked access to their users in Karnataka, some other online fantasy sports apps are still trying to interpret and adhere to the new legislation.

Industry experts predict that the ban will impact over 10% of online transactions in the country and will cause around 7-12% loss of revenue to the online gaming industry other than damaging the investor-friendly tag of Karnataka. 

 

The Way Forward

This move is the latest of the numerous attempts by legislatures in different States of the Country to ban online gaming. Such actions are criticized for showcasing the misplaced concern of the legislature for online games, and critics advocate for regulation instead of an outright ban. While clarity is needed and perhaps the rules which are yet to be framed may help clear the air, the Gaming industry may not wait until then from moving to Court challenging the blanket ban.

References

[1] (2021) SCC OnLine Mad 2762.

[2] D.B. Civil Writ Petition No. 2026/2021.

[3] SLP (Civil) Diary No. 18478/2020.

 

Image Credits: Photo by Aidan Howe on Unsplash

The order of the Mumbai Tribunal has, indeed, widened the scope of ‘onus’ placed on the assessee to prove the genuineness of a particular transaction. Such ‘onus’ will not be deemed to be discharged by merely filing the documents before the tax authorities, but the assessee would have to go one step further to justify the rationale of such transactions in order to prove that the transaction has not been entered as a colorable device to defraud the Revenue.

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Junk food ban- Legal responsibilities of School Authorities

According to the World Health Organization (WHO), 38 million children under the age of 5 were overweight or obese in 2019 and over 340 million children and adolescents aged 5-19 were overweight or obese in 2016. The statistics are alarming because obesity is just one of the myriads of health problems that result from continuous consumption of a poor-quality diet high in junk food. Plus, obesity is an external manifestation of the problem, but the harmful effects of these zero-nutrition foods fester within the body and cause permanent damage. The repercussions are far worse when the habit is inculcated at a tender age. Junk food can cause memory and learning problems as well as fatigue and weakness among children. Further, advertisement specifically designed to influence young minds into making unhealthy choices is another grave cause of concern.

Since schools are the temples of learning and the place where children spend most of their waking hours, initiating a healthy eating environment in and around the school premises was crucial. Towards this end, regulations have been passed by the Government to ensure that children are exposed to wholesome meals and proper guidance that instill good eating habits.

Background

A Public Interest Litigation (PIL) was filed by an NGO in 2010 seeking a direction banning the sale of junk food and aerated drinks in and around schools (Uday Foundation for congenital defects and rare blood groups Vs. Union of India & Ors.). Pursuant to the PIL, the Hon’ble High Court of Delhi issued a direction to the Central Government to draft detailed guidelines to regulate the sale of junk food and aerated drinks in and around school premises in the country.  

In light of the directions, the Food Safety and Standards Authority of India (FSSAI) has notified the Food Safety and Standards (Safe food and balanced diets for children in school) Regulations, 2020 (“the Regulations”) that prohibits the sale, marketing and promotion of junk food within the school premises and the surrounding vicinity. The said Regulations apply to –

  1. Schools (pre-primary, primary, elementary, secondary, day-care) that provide food within the campus.
  2. Shops/stalls or food outlets which sell food products within fifty meters of the school gate in any direction.
  3. Food Business Operator (FBO)* /Food caterers who supply mid-day meals.

This Regulations inter-alia outlines the roles and responsibilities of the School Authority to ensure safe food and balanced diets on school premises.   

Licensing requirements

  • The School Authority shall get registered as an FBO to sell/provide catering of school meals by itself on the school campus.
  • The School Authority shall mandatorily enter into a contract or transaction with the registered or licensed FBOs under the provisions of the Food Safety and Standards Act, 2006 (“The Act”).
  • The Central or State Department of School Education shall ensure that FBOs contracted by it for the operation of the mid-day meal scheme are registered or licensed under the provisions of the Act.
  • The provisions of Regulations shall be duly complied by FBOs with effect from 01st July 2021.

By registering under the Act, the School Authority shall be liable for the compliance of provisions of the Act and the Rules and Regulations made thereunder. Any violations or non-compliance by the school authority under the Act shall attract penal provisions and penalties including imprisonment.

Prohibition of Junk Food 

  • The School Authority shall ensure that no person shall sell or offer for sale including free sale, or permit sale, of food products high in saturated fat or trans-fat or added sugar or sodium [High in Fat, Salt and Sugar (HFSS) ** or Junk food] in school premises or campus.
  • The School Authority shall ensure that there shall not be any advertisement, banner or wallpaper or direct/indirect promotion of Junk food in school premises or campus.
  • The School Authority has to display a board containing the warning “Do not sell, including free sale or market, or advertise Junk food within school premises or campus” at the entrance gate or gates of the school.
  • No person shall directly or indirectly advertise or market or sell or offer for sale including free sale, or permit sale, of Junk food products in the school campus or to school children in an area within fifty meters from the school gate in any direction.

The School Authorities are made responsible to ensure the sale, advertisement, and promotion of Junk food do not take place even by a third party.  Shops/stalls and food outlets which are running within school premises or within fifty meters of the school gate in any direction shall stop selling all kinds of Junk food products. The Regulations with respect to prohibiting and promoting of junk foods in and around school premises shall come into force only from such date as the Food Authority may, by notification in the Official Gazette, appoint.

Sanitary and hygienic practices

  • The School Authorities shall encourage to adopt a comprehensive program for promoting safe food and balanced diets amongst school children and meet specified benchmarks to convert school campus into ‘Eat Right Campus’ and also follow guidance from “Dietary guidelines for Indians – A Manual” issued by the National Institute of Nutrition and other expert institutions or authorities.
  • The School Authority shall ensure that the FBOs supplying prepared school meals in the school premises are identified and selected food that can be served or sold on the basis of the broad guidelines given in the Schedule to Regulations and as per the directions, issued by the Food Authority or the Commissioner of Food Safety of the State. The School Authority may appoint a Health and Wellness Ambassador or Health and Wellness team, who shall act as the nodal persons to monitor the availability of safe, balanced, and hygienic food.
  • The School Authority may engage with nutritionists, dietitians, nutrition associations or seek parental support to assist in the drafting of the menu for the children, periodically.
  • The crèches or day-cares for infants or children up to the age of twenty-four months old are also expected to serve safe and balanced diets to them. 

Implementation, Monitoring, and surveillance

  • The School Authority/ State Food Authority/ Any public authority like Municipal Corporation or any other local body or Panchayat in an area shall have a system of regular or periodic inspection of school premises to ensure that safe, balanced and hygienic food is served to children.
  • The State Level Advisory Committee (SLAC) constituted under the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011 shall create a subcommittee consisting of representatives from the Department of School Education, and public health professionals in the field of food and nutrition to monitor the implementation of these regulations and to ensure availability of safe and wholesome food to school children.
  • Implementation of these Regulations is achieved by action or complaint of the School Authorities to concerned Food Safety Authorities.  

PROS:

CONS:

Undoubtedly, Junk food is addictive by nature and spoils children’s physical and mental health at an early age. Objectives of the prohibition of unhealthy Junk food and also monitoring hygienic/nutritious food for children are well appreciated. The Regulations also encourage schools to implement and monitor a balanced food menu for children. Junk food manufactures may change/restrict ingredient limits/compositions of saturated fat or trans-fat or added sugar or sodium in their products to escape from the labeling of their products as Junk food. The Regulations will address all serious problems arising from undernutrition and malnutrition in children who are living in rural areas.

Implementation and enforcement of the Regulations is not easy unless School Authorities create awareness among children about the side effects of eating Junk food and the necessity of nutritious food. It is not easy to label food as Junk food and it requires a regular monitoring system. Some parents will provide Junk food in lunch boxes and the same will defeat the purpose of the Regulations. Majority of shops and outlets near schools sell Junk food to attract children. Small vendors and shopkeepers who keep and sell Junk products would be badly affected by the regulations. Small businesses/manufacturers of food products such as fried chips, bakery items, chocolate bars, candies, chocolates, peppermints, sweet gums, wrapped sweets that cannot be sold near the school would face losses and may also result in closure.  

 Conclusion

The FSSAI has notified and implemented the Regulations after conducting various surveys, research, and consultation with the public, nutritionists, various organizations, and medical experts. Now, the Regulations must be implemented and followed by the School Authorities in letter and spirit without any further delay. 

Manufacturing and Best Before dates to be mandatorily displayed on sweet packages

The FSSAI has also issued Orders on 25th & 30th September 2020 for mandating the compulsory display of Manufacturing date and Best Before date on non-packaged and loose sweets containers/packages/tray holding sweets at the outlet sale.

Image Credits:  Photo by Fábio Alves on Unsplash

The FSSAI has notified and implemented the Regulations after conducting various surveys, research and consultation with the public, nutritionists, various organisations and medical experts. Now, the Regulations must be implemented and followed by the School Authorities in letter and spirit without any further delay.

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Supreme Court lifts the RBI notification prohibiting banking services to Virtual Currency Business: Analysis

After providing the reference of more than 50 cases about legality of virtual currency from across the world in its 180-page-long judgement, the Supreme Court, on March 4th, 2020 lifted the RBI notification prohibiting banking services to Virtual Currency (VC) business.

‘Cryptocurrency’ means “a math-based, decentralised convertible Virtual Currency Protected by cryptography by relying on public and private keys to transfer value from one person to another and signed cryptographically each time it is transferred.”[1]

“‘Virtual currency (VC)’ as the name suggests is a digital representation of value that can be traded digitally and functioning as (1) a medium of exchange; and/or (2) a unit of account; and/or (3) a store of value, but not having a legal tender status.” [2]

On a global level, regulatory responses to cryptocurrency have ranged from a complete clamp down in some jurisdictions to a comparatively ‘light-touch regulatory approach.

Though cryptocurrency may not currently pose systemic risks, its increasing popularity leading to price bubbles raises serious concerns for consumer and investor protection and market integrity. The cryptocurrency eco-system may affect the existing payment and settlement system which could, in turn, influence the transmission of monetary policy.[3]

Brief facts:

It was in 2013, for the first time, RBI had noted and discussed the risks of the development of technology and VCs in its Financial Stability Report[4]. In the report, RBI had mentioned VCs as unregulated money and that regulators were studying the impact of the same.  A press release was thereafter issued by RBI on the potential impact and risks associated with VCs. Later that year newspapers reported about the first-ever raid in India by enforcement authorities on two Bitcoin firms.

On 01-02-2017, RBI again issued a Press Release[5] cautioning users, vendors and holders of VCs. Closely on the heels of the Press Release, the Ministry of Finance constituted an Interdisciplinary committee and the committee gave its report on 25-07-2017. The committee recommended issuing warnings to the general public that the Government does not support cryptocurrencies and those offering to buy or sell these currencies must stop such activities. However, it was clarified that there was no restriction on the use of blockchain technology.

RBI issued a “Statement on Developmental and Regulatory Policies[6]” followed by a circular[7] dated April 6, 2018,  directing the entities regulated by it (i) not to deal in virtual currencies nor to provide services for facilitating any person or entity in dealing with or settling virtual currencies and (ii) to exit the relationship with such persons or entities, if they were already providing such services to them. It appears that at around the same time (April 2018), the Inter-Ministerial Committee submitted its initial report, (or a precursor to the report) along with a draft bill known as ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019’.[8]

Challenging the said Statement and Circular and seeking a direction to the RBI not to restrict or restrain banks and financial institutions regulated by RBI from providing access to banking services to those engaged in transactions in crypto assets, these writ petitions were filed. The petitioner in the first writ petition is a specialized industry body known as the ‘Internet and Mobile Association of India’ which represents the interests of the online and digital services industry. The petitioners in the second writ petition comprise a few companies which run online crypto assets exchange platforms, the shareholders/founders of these companies, and a few individual crypto-assets traders.

After detailed analysis, the Hon’ble Supreme Court bench comprising of Hon’ble Justices R.F. Nariman, Aniruddha Bose, and V. Ramasubramanian set aside the impugned circular issued by RBI on “directing  the entities regulated by RBI (i) not to deal in virtual currencies nor to provide services for facilitating any person or entity in dealing with or settling virtual currencies and (ii) to exit the relationship with such persons or entities, if they were already providing such services to them.” [9]

There were two main issues raised before the Hon’ble Supreme Court.

 

  1. Whether RBI had the power to prohibit the activities of trading in VCs?

 

No power at all:

One of the major contention raised by the  Petitioners is that RBI has no power to prohibit VC as it is neither a  legal tender nor comes within the credit system of the country so as to enable RBI to act upon the power conferred in it. Also, that, it does not have any characteristics of money for RBI to have the power to regulate the same.  

RBI in its counter-argument agreed to the fact that VC does not satisfy with being acknowledged as currency, however, stated that VCs do not have any formal or structured mechanism for handling consumer disputes/ grievances. Further, due to its anonymity/pseudo-anonymity characteristic, it is capable of being used for illegal activities. Increased use of VCs would eventually erode the monetary stability of the Indian currency and the credit system. Therefore, RBI has every power to regulate and control the activities of trading in VCs.

With regard to the above contentions and arguments, the Supreme Court after analyzing opinions and definitions of various legislations observed that though VCs are not recognized as legal tender, they are capable of performing some or most of the functions of real currency. The statutory obligation that RBI has, as a central bank, is  (i) to operate the currency and credit system, (ii) to regulate the financial system, and (iii) to ensure the payment system of the country to be on track, would compel them naturally to address all issues that are perceived as potential risks to the monetary, currency, payment, credit and financial systems of the country. Therefore, anything that may pose a threat to or have an impact on the financial system of the country can be regulated or prohibited by RBI, despite the said activity not forming part of the credit system or payment system. and concluded that the users and traders of virtual currencies carry on an activity that falls squarely within the purview of the RBI.

If at all power, only to regulate:

Another contention made by the Petitioners was that, if at all RBI is conferred with any power it is only to regulate, but not to prohibit.  It was contended by petitioners that the power to prohibit something as res extra commercium was always a legislative policy and that therefore the same could not be done through executive fiat.  In support of its contention, the petitioners referred to the definition of the expression “payment system” under the Payment and Settlement Act and contented that VC Exchanges do not operate any payment system and that since the power to issue directions under Section 18 of the Payment and settlement systems Act was only to regulate payment systems, the invocation of the said power to something that did not fall within the purview of payment system was arbitrary.

RBI in its counter-argument stated that the impugned decision of RBI was legislative in character and was in the realm of an economic policy decision taken by an expert body warranting a hands-off approach from the Court.  

In this regard, the Supreme Court observed that the power of RBI was not merely curative but also preventive. Further, in any case, the projection of the impugned decisions of RBI as a total prohibition of activity altogether, might not be correct. The impugned Circular did not impose a prohibition on the use of or the trading in VCs. It merely directed the entities regulated by RBI not to provide banking services to those engaged in the trading or facilitating the trading in VCs. The fact that the functioning of VC Exchanges automatically got paralyzed or crippled because of the impugned Circular, was no ground to hold that it tantamounted to total prohibition.

Supreme court in this issue held that in the overall scheme of the Payment and Settlement Systems Act, 2007, it was impossible to say that RBI did not have the power to frame policies and issue directions to banks who are system participants, with respect to transactions that would fall under the category of payment obligation or payment instruction, if not a payment system. Hence, the argument revolving around Section 18 failed.

  1. If RBI has the power to deal with carrying out activities related to VCs, whether this impugned circular was a proper exercise of that power?

The second issue raised was regarding the mode of exercise of power and the court-tested its appropriateness and validity based on certain well-established parameters.

No application of mind

One of the major contentions by the petitioner was that RBI had not adequately applied its mind. However, SC was of the view that RBI had been brooding over the issue for almost five years without taking any extreme step. RBI had even issued a press release titled “RBI cautions users of Virtual Currencies against Risks”. Therefore, RBI could hardly be held guilty of non-application of mind.

Malice in law

Another contention made by petitioners was that the impugned Circular was a colorable exercise of power and tainted by malice in law, in as much as it sought to achieve an object completely different from the one for which the power was entrusted.

However, SC observed that in order to constitute colorable exercise of power, the act must have been done in bad faith and the power must have been exercised not with the object of protecting the regulated entities or the public in general, but with the object of hitting those who form the target. To constitute malice in law, the act must have been done wrongfully and wilfully without reasonable or probable cause which is not the case here. Hence, SC rejected the argument.

Violative of Article 19 and proportionality

The next ground of issue raised before the Supreme Court was on the basis of Article 19(1)(g) of the Constitution. It was contended by the Petitioners that since access to banking was the equivalent of the supply of oxygen in any modern economy, the denial of such access to those who carry on a trade which was not prohibited by law, was not a reasonable restriction, rather it was extremely disproportionate. It was further contended that the right to access the banking system was actually integral to the right to carry on any trade or profession and therefore legislation, subordinate or otherwise whose effect or impact severely impairs the right to carry on a trade or business, not prohibited by law, would be violative of Article 19(1)(g).

RBI raised two fundamental objections in this regard. The first was that corporate bodies/entities that had come up with the challenge were not ‘citizens’ and hence, not entitled to maintain a challenge under Article 19(1)(g). Secondly, there was no fundamental right to purchase, sell, transact and/or invest in VCs and that therefore, the petitioners could not invoke Article 19(1)(g).

The SC, however, objected to the contentions of RBI for two reasons namely, (i) that at least some of the petitioners are not claiming any right to purchase, sell or transact in VCs, but claiming a right to provide a platform for facilitating an activity of trading in VCs between individuals/entities who want to buy and sell VCs) which is not yet prohibited by law and (ii) that in any case, the impugned Circular does not per se prohibit the purchase or sale of VCs.

SC observed that, despite the fact that the users and traders of VCs are also prevented by the impugned Circular from accessing the banking services, the circular has not paralyzed many of the other ways in which crypto-currencies can still find their way to or from the market. It was further noted by the apex court that if a central authority like RBI, on a conspectus of various factors perceive the trend as the growth of a parallel economy and severs the umbilical cord that virtual currency has with fiat currency, the same cannot be very lightly nullified as offending Article 19(1)(g).

On the question of proportionality, the petitioners relied upon the four-pronged test summed up in the opinion of the majority in Modern Dental College and Research Centre v. State of Madhya Pradesh. These four tests were (i) that the measure was designated for a proper purpose (ii) that the measures were rationally connected to the fulfillment of the purpose (iii) that there were no alternative less invasive measures and (iv) that there was a proper relation between the importance of achieving the aim and the importance of limiting the right.

SC observed that the impugned circular was issued with the aim of prohibiting the trade in VCs. The object of hitting at trading in VCs was to ensure (i) consumer protection (ii) prevention of violation of money laundering laws (iii) curbing the menace of financing of terrorism and (iv) safeguarding of the existing monetary/payment/credit system from being polluted. However, in the process, it has hit VC Exchanges and not the actual trading of VCs, consequently, the volume of transactions in VCs (perhaps through VCEs alone) is stated to have come down.

SC further observed that at the time when the impugned Circular was issued, RBI had not obviously addressed many of the issues flagged by the writ petitioners. SC held that RBI failed to pass the test of proportionality due to the following reasons:

  • Even though RBI states that it can adversely impact its regulated entities, consumers, and the economy, RBI has not so far found, in the past 5 years or more, the activities of VC exchanges to have actually impacted adversely, the way the entities regulated by RBI function. Before taking any pre-emptive action against VCs, the RBI is required to show some semblance of any damage suffered to it or regulated entities. Since they don’t have any substantial evidence to show damage, RBI failed in the test of proportionality.
  • Secondly, despite coming out with various circulars, statements against cryptocurrency, RBI has consistently taken the stand that it has not prohibited VCs in the country. Therefore, RBI’s position is still murky.
  • Thirdly, the Government of India is unable to take a call despite several committees coming up with several proposals including two bills. It is also worthwhile to mention that the draft bills also take opposite stands where one bill tries to ban cryptocurrency while the other bill tries to regulate them.

Order:

In light of answering the final issue, SC held that petitioners are entitled to succeed, and the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality.

Conclusion:

It is only in the last leg that the apex court held against the respondent RBI and ordered to set aside the circular. The ruling was based on the reasons that- (i) RBI has failed to provide any empirical evidence to show that VCs have negatively impacted the banking sector or other entities regulated by the RBI; (ii) the inconsistencies in proposals made by Govt and; (iii) RBIs consistent position that they have not banned VC.

However, notably, this judgement lost the opportunity to answer crucial questions or take a definitive stand on cryptocurrency. The Court could take measures to legalize cryptocurrencies or direct the RBI to come up with more documentation and legal backing to ban the same.   

Even though this judgement held in favour of the cryptocurrency communities, we cannot conclude that that the apex court is for VC it in fact empowered RBI to regulate virtual currency clearly confirming the powers of RBI in this regard.

Till this judgement, RBI wasn’t very sure about whether it has the power to hit VC directly. With that dilemma, RBI issued this impugned (now banned) Circular by ring-fencing them.   This judgement now paves a way for RBI to take a decision on whether to completely ban VC or should it come up with alternate solution capable of dealing with virtual currencies for the stability of the financial system. Though the judgement set aside the RBI circular, it in fact empowered RBI to regulate and even ban VC’s in the future. You can now expect some fresh regulatory steps from RBI or from the government.   

This judgment lost the opportunity to answer crucial questions or take a definitive stand on cryptocurrency. The Court could take measures to legalize cryptocurrencies or direct the RBI to come up with more documentation and legal backing to ban the same.   

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