The Delhi High Court has admitted a petition by Ahmedabad based cryptocurrency exchange CoinRecoil which challenges the RBI’s order that barred all regulated entities like banks from dealing in virtual currencies. The high court has issued a notice to the central bank, the Ministry of Finance and GST Council on the matter. CoinRecoil, which is scheduled to launch its service in August this year, is building a FIAT-to-Cryptocurrency platform.
In the petition, CoinRecoil requested the High Court to issue an appropriate writ quashing the circular issued by the RBI withdrawing banking support to virtual currency exchanges. The petitioner claimed the circular to be arbitrary, unconstitutional and violative of Article 14 and Article 19(1)(g) of the Constitution of India, 1950.
According to the company’s press statement, CoinRecoil in its petition also included the Union of India and Goods and Service Tax Council responsible for the current turmoil in the cryptocurrency sector. The company believe that both the government and the GST Council have failed to introduce appropriate regulations with respect to cryptocurrencies in the GST framework.
Tech entrepreneur and blockchain commentator Pankaj Jain commented on the development in a Twitter thread saying, “The appeal (by CoinRecoil) amongst other things, states that the prohibition by the RBI is unconstitutional because it prevents Indians to rights guaranteed by India’s constitution, like doing business, earning a living, etc.” Jain added, “The appeal also asks India’s central bank to provide specific reasons why it believes the fledgling cryptocurrency industry in India should be curtailed. As of now, they haven’t provided specifics on why crypto in India should be limited. The government has not banned crypto.”
RBI’s cryptocurrency ban
Earlier this month the RBI had directed all regulated entities including banks not to provide services to businesses dealing in virtual currencies (cryptocurrencies) like bitcoins. While the RBI had stopped short of banning cryptocurrencies entirely, this move severely restricts consumers’ ability to either purchase or sell cryptocurrencies like Bitcoins.
According to the Central bank, the decision came into effect immediately. Regulated entities which already are dealing with virtual currency shall exit the relationship within a specified time. RBI had said that it will issue detailed guidelines in a separate circular soon.
In a statement on various regulatory policies, the RBI had conceded that “technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system.” It goes on to say that cryptocurrencies “raise concerns of consumer protection, market integrity and money laundering, among others.”