Over the past month, while the markets go through a bull-run, the Indian cryptocurrency markets continue to remain sceptical as the legal drama unfolds. Earlier this month, the Reserve Bank of India had issued a circular stating that all bodies regulated by the RBI should not provide services to those individuals and organizations which deal with cryptocurrencies - effectively choking the crypto-economy in India.
Basically, all banks and payment wallets are regulated by the RBI and once they stop providing their services, it means that money can’t be sent from banks to cryptocurrency wallets or from cryptocurrency wallets to banks! This has led to a major panic and outcry among the cryptocurrency traders and merchants in India. Many have appealed against this and petitions have been filed online - as well as in the court of law.
Last week, Kali Digital Ecosystems, the company behind upcoming cryptocurrency exchange CoinRecoil had filed a writ petition in the Delhi High Court, calling this move by the government as ‘unconstitutional’, as it violates various articles and acts in the Indian legal system.
The petition filed by Kali Digital pointed out that this move from the RBI violates Article 19(1)(g), as well as Article 14 of the Indian constitution. The petition sought a response from the RBI, the Ministry of Finance and the GST Council. Today, the Delhi High Court has officially accepted this writ petition and will be holding a hearing on the 24th of May. Reserve Bank of India (RBI), The Union of India through Secretary, Ministry of Finance and GST Council have been sent out legal notices from the Delhi High Court.
Commenting on the case, Ms. Rashmi Deshpande, an Associate partner at law firm Khaitan & Co. stated, “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. A 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”
Indian cryptocurrency traders and cryptocurrency exchanges have been upset with this decision from the RBI. Another Indian cryptocurrency exchange, Bangalore based Unocoin is also expected to challenge RBI on legal grounds over this decision, as per reports from Business Standard.
In their writ petition, Kali Digital Ecosystems has claimed that this move from the Reserve Bank of India violates the freedom of trade and occupation, as well as constitutes to an unfair treatment. The Indian constitution states that everyone is equal in the eyes of the law - and without outlawing the business that they are doing, the government cannot restrict their banking services.
While this legal drama unfolds in India, elsewhere in the world, cryptocurrency exchanges in South America too, are taking the banks to the court. Chilean cryptocurrency exchanges have come together and appealed to a court against the banking embargo placed on them by the banks in the region.