In April of this year, the Reserve Bank of India issued a circular to all regulated financial institutions in the country asking them to deny banking services to individuals and businesses dealing in cryptocurrencies. A number of cryptocurrency businesses in the country took the RBI to the court - and the first cryptocurrency petition was heard by the Supreme Court of India today. However, the decision has come in favour of the RBI. 

The court has heard the petition but has decided to not issue a stay order on the RBI circular. The RBI circular had provided a period of three months to the cryptocurrency exchanges, beyond which they would not get access to banking services. The deadline given by the RBI ends on the 5th of July. 

The petition that was heard by the apex Indian court today was filed by the Internet and Mobile Association of India (IAMAI). Crypto exchanges such as Zebpay, Wazirx and Unocoin are the members of the IAMAI. This was the first petition that was heard by the Supreme Court. Four more petitions are set to be heard by the court on the 20th of July. 

Before today, there was an anticipation that the Supreme Court may refer to the recent judgments made in other nations and take action accordingly. However, the court’s refusal to issue a stay order on the RBI’s circular means that it is now certain that the cryptocurrency exchanges will be barred from getting banking services following the 5th of July. Indian crypto traders and owners of cryptocurrency businesses in India are now awaiting the final verdict which is expected to come out on the 20th of July. 

Exchanges and crypto businesses in India had filed writ petitions in courts across India stating that this move from the RBI is ‘unconstitutional’ as it violates the Freedom to practice any trade without discrimination - and that by denying them banking services, the RBI is choking the industry to death. 

Interestingly, a Right to Information query revealed that the Reserve Bank of India had issued this circular without any prior research or consultation with other nations which have been facing similar issues when it comes to dealing in cryptocurrencies. Over the past few months many experts, including Ripple’s Dilip Rao have commented that this order is likely to be reversed.

Crypto-Exchanges Are Prepared For The Worst Case Scenario

Cryptocurrency exchanges in India have been retaliating hard. However, they are also ready for a worst-case scenario, in case the Supreme Court decides that the RBI circular will prevail. A number of exchanges have begun to add more cryptocurrencies to their list - and have also begun to support crypto-to-crypto trading.

By supporting crypto to crypto trading pairs, the exchanges are now allowing users to buy other cryptocurrencies using Bitcoins instead of using fiat cash. This is a bold step from the exchanges - and a move which shows that the exchanges will continue to operate despite governmental hostilities. Traders will now rely more on P2P platforms where they can buy cryptocurrencies in exchange for cash. While there are some existing P2P platforms such as, cryptocurrency exchanges such as Koinex are setting up similar services for their customers.