The Reserve Bank of India’s Prohibition on dealing in Virtual Currencies (VCs) circular was an April 6, 2018 central-bank direction addressed to commercial banks, co-operative banks, payments banks, small finance banks, non-bank finance companies and payment system providers. The circular directed RBI-regulated entities not to deal in virtual currencies or provide services that facilitated persons or entities dealing with or settling virtual currencies. It took effect immediately for new dealings and required existing virtual-currency service relationships to be exited within three months.
As of July 20, 2026, the circular should be treated as a historical, struck-down measure rather than an operative restriction. On March 4, 2020, India’s Supreme Court set aside the April 6, 2018 circular in Internet and Mobile Association of India v. Reserve Bank of India. RBI later issued a May 31, 2021 notice stating that the circular was no longer valid from the date of the Supreme Court judgment and could not be cited or quoted by regulated entities.
For CryptoSlate’s reference taxonomy, the circular is best understood as Indian agency guidance with binding effect on RBI-regulated financial entities while it was operative. It sits at the intersection of banking access, payments, market-perimeter questions, AML/CFT risk and consumer protection. Because the circular has been set aside, its main relevance today is historical and interpretive.
Key provisions of the RBI virtual currency circular
The 2018 circular implemented the virtual-currency portion of RBI’s April 5, 2018 Statement on Developmental and Regulatory Policies. In that statement, RBI described virtual currencies, crypto currencies and crypto assets as technologies with possible efficiency benefits, while also identifying concerns relating to consumer protection, market integrity and money laundering.
- Immediate restriction for regulated entities: RBI-regulated entities were directed not to deal in virtual currencies or provide services facilitating any person or entity dealing with or settling VCs.
- Broad list of covered services: RBI listed maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting virtual tokens as collateral, opening accounts of exchanges and processing transfers tied to VC purchases or sales.
- Exit period: Regulated entities that already provided such services were directed to exit those relationships within three months from April 6, 2018.
- Statutory basis cited: RBI cited powers under the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934 and the Payment and Settlement Systems Act, 2007.
Jurisdictional impact in India
The circular’s practical effect was to restrict banking and payment-system access for virtual-currency exchanges and related businesses in India. It did not itself create a general criminal prohibition on holding or transferring virtual currencies, and the Supreme Court later observed that the measure did not per se prohibit the purchase or sale of VCs. The distinction is important for readers: this profile covers a banking-access circular, not a general Indian crypto statute.
Status and Supreme Court review
The Supreme Court held that RBI had wide powers to regulate banking, credit and payment systems, including preventive measures. However, the Court also assessed the circular under proportionality principles. It noted that virtual currencies were not banned and that RBI had not shown harm suffered by its regulated entities from their interface with VC exchanges. On that basis, the Court allowed the writ petitions and set aside the April 6, 2018 circular.
RBI’s 2021 customer due diligence notice confirmed the status effect for regulated entities: references to the 2018 circular were not in order, because the circular had been set aside and was no longer valid from March 4, 2020. The same notice stated that banks and other regulated entities could continue customer due diligence under applicable KYC, AML/CFT, PMLA and FEMA standards. This profile does not summarize those later regimes except to note that they are separate from the struck-down 2018 circular.