Bitcoin
India's Supreme Court decides that cryptocurrencies cannot be outlawed, and going against the decision of the central bank. Even the government had come up against allowing the usage of such currencies, including Bitcoin. Image Credit: Reuters

New Delhi: India’s Supreme Court struck down a central bank directive that effectively outlawed virtual currencies in Asia’s third-largest economy.

A three-judge bench agreed with petitions by cryptocurrency exchanges, startups and industry bodies that had challenged the Reserve Bank of India’s April 2018 decision to ban banks from offering any services to support digital currencies.

The ruling is a boost for virtual currency investors and businesses in India, where a skeptical federal government is mulling stringent regulations. The Supreme Court is separately hearing another case, in which it will decide on regulations for digital currencies, and Wednesday’s judgment weakens the case for strict norms.

Meanwhile, the Indian central bank has been exploring the creation of a sovereign-backed digital currency even as it escalated its crackdown on private instruments like bitcoin, citing the potential for money laundering and other illegal activities.

Opponents of the curbs argued that the central bank wasn’t empowered to issue the ban and its directive hadn’t adequately studied the matter.