The Reserve Bank of India (RBI) will soon be going to court. This comes after a crypto startup has put forward a petition contesting the bank’s conditional ban on cryptocurrency.
Fickle is an apt term to describe India’s relationship with Bitcoin and cryptocurrencies in general. There’s no doubt that its population is all aboard the crypto train, showing a keen interest in the digital currency industry. India’s authorities? Not so much.
The country’s Finance Minister has previously stated that cryptocurrency will not be seen as legal tender. More recently, the Reserve Bank of India (RBI) had ordered that all “entities regulated by RBI” were to cease providing any type of support to anyone dealing in cryptocurrencies.
RBI to Answer to Courts
The circular detailing the ban, titled “Withdrawing Banking Support to Virtual Currency Exchanges,” is getting the whole Indian crypto community talking and taking action. According to Inc42 and Quartz India, a crypto startup has taken the RBI to task, or rather, to court, about the matter.
Kali Digital Eco-Systems has gone to the Delhi High Court with a petition to have the circular revoked. The court has accepted the petition and subsequently issued a notice to the RBI, the Indian government, and the Goods and Services Tax (GST) Council.
Government Part of the Problem
The reason for including the Republic of India is that the government, through the Department of Economic Affairs, essentially gave the RBI the authority to issue the circular. The GST Council was included as they have still not released a regulatory framework or guidelines with regard to cryptocurrency use and trade in the country.
India’s government has set up a committee to work on drafting laws for the crypto industry. However, these will most likely only be submitted for review in March of next year.
Rashmi Deshpande, a lawyer for Kali Digital, said:
The move by the RBI has put the burgeoning cryptocurrency sector in jeopardy and may affect the basic rights of such entities to carry on any trade. The circular appears to be arbitrary and unconstitutional since it does not give strong facts as to why RBI is against the business of cryptocurrencies. Logical and well-thought arguments backed by solid facts are the primary requirements under the Constitution to put a stop to any business in India.
Complaints Going Digital
In addition to the courts, the country’s crypto community is taking their grievances online too. A petition on Change.org, which has already been signed by over 43,000 people, reads:
Crypto and blockchain as a concept can’t be stopped. You can just decide whether you want to participate with full throttle or get left behind. The current stance from the government shows they would want to remain left behind after missing the internet revolution first, AI revolution next and now blockchain revolution.
Exchanges Not Happy Either
Anirudh Rastogi is a managing partner at TRA, a law firm representing many Bitcoin exchanges in the country. He had this to say:
It (the RBI directive) has come with this overarching order that can be challenged on several counts. There is a right to trade and it cannot be restricted in absolute terms. Only reasonable restrictions can be imposed and applied but a complete prohibition as restrictive as this was unnecessary.
Kali Digital hope to launch their own crypto exchange, CoinRecoil, in August this year.
With regard to their petition, we’ll have to wait another month for any new developments as the case is scheduled to be heard on the 24th of May.
Do you think that the RBI will rescind its ban? How do you think that their ban will impact crypto trading in the country? Let us know in the comments below!
Images courtesy of Adobe Stock and Bitcoinist archives.