Crypto exchanges to approach SC against RBI clampdown on virtual currency trading

Following the RBI guidelines to stop dealing in cryptocurrencies, the traders may go one step ahead to challenge the central bank before the Supreme Court. Meanwhile, these traders have been already running a campaign against RBI to rethink over its decision on virtual currency.

Last week, the bank regulator had released a statement directing all regulated entities, including banks, e-wallets, and payment gateway providers, to stop dealing with individuals and businesses in decentralised currency.

Quoting some anonymous sources, Quartz report says that some crypto exchanges are willing to file a petition to challenge the RBI’s order. These exchange owners are also trying to form a community before going to the apex court.

The head of another such exchange, too, said the legal route was being explored, though he didn’t divulge details, the report added.

According to Anirudh Rastogi, managing partner at law firm TRA that represents several bitcoin exchanges in the country, these traders can file a petition on the ground of right to trade as only reasonable restrictions can be imposed and applied but a complete prohibition as restrictive as this was unnecessary.

Also Read: India’s biggest crypto theft: Bitcoin worth Rs 19 crore stolen from Coinsecure

He also added that RBI caution step is right against money laundering and terror financing, but a complete crackdown isn’t the only way to achieve it.

This could cause a serious question on trading of cryptocurrency as the earlier petition filed before the Supreme Court hasn't yielded any result. In November last year, a Public Interest Litigation (PIL) was brought before the Supreme Court seeking a ban on sale and purchase of cryptocurrencies including bitcoin, litecoin, bbqcoins, dogecoins etc.

Meanwhile, an online petition urging the RBI to withdraw its decision is being circulated. Launched by Bitbns, another cryptocurrency exchange, it has already received over 26,000 signatures. “This is clearly stifling innovation around blockchain,” the petition says. “If a government does not facilitate adoption of new technology the country stands to (be) left behind.”

Additionally, RBI crackdown on virtual currency has already seemed to be facing the wrath of the traders. They call for a campaign against it with #RBICantStopMe on different social media especially Twitter and Facebook.

Industry experts also say that RBI’s decision will encourage hawala trading and keep bitcoin trading out of the purview of income tax authorities.

The RBI decision also panicked the investors as they are now selling their virtual currencies stored in Bitcoin exchanges such as Coinsecure and Zebpay and seeking advice from the experts.

RBI is too exploring the creation of its own cryptocurrency. It has also set up a panel to study the desirability and feasibility of introducing a virtual currency.