India’s Crypto Exchange Takes Its Central Bank to Court Against Banking Ban
Amidst a lot of uncertainty brewing with the state of digital currencies in India, India's Central Bank issued a notice earlier this month on April 6th to cut-off ties with all the crypto exchanges operating in the country. The Central Bank gave all the registered banks a three-month notice period to withdraw their ties.
However, this was soon received with a huge backlash from crypto enthusiasts and digital currency exchanges with thousands of petitions signed online asking the central banks to reconsider and pull back its decision.
Challenging this decision of the Central Bank, Ahmedabad-based Kali Digital Eco-Systems has filed a petition with the Delhi High Court. The Ahmedabad-based company is working to launch its own cryptocurrency exchange - CoinRecoil - in August 2018.
Considering its plea, the Delhi High court has sought responses from the Ministry of Finance, Reserve Bank and the GST Council. According to the statement provided by CoinRecoil, the banking ban imposed by RBI violates Article 14 and Article 19(1)(g) of the Constitution of India. The principles state that every individual has the right to equality before the law and also the right “to practise any profession, or to carry on any occupation, trade or business.”
Rashmi Deshpande, an associate partner of law firm Khaitan & Co., said, “The move by the RBI has put the burgeoning crypto currency 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.”
The Kali Digital Eco-systems says that there have been no proper rules and regulations set by the GST council for cryptocurrencies. The company also said that RBI has failed to form a proper definition for ‘cryptocurrency’ by simply calling it a technological innovation and putting a vague statement.
There also have been other lawyers working for the crypto-exchanges who have raised questions against RBI’s decision. Anirudh Rastogi, managing partner at law firm TRA, in a word with Quartz said: “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.”
India’s existing government has set a new committee to prepare a draft law for digital currencies.