Filing a petition in the High Court, a cryptocurrency platform has appealed for quashing the Reserve Bank of India (RBI) recent guidelines that barred banks from dealing with any business entity dealing in cryptocurrencies.
Kali Digital Eco-Systems, an Ahmedabad-based early-stage cryptocurrency platform that runs crypto exchange CoinRecoil, alleged that the central bank guideline violates Articles 19 (1) (g) and 14 of the Constitution.
“On account of the impugned circular, the petitioner will not be able to avail banking services to operate the cryptocurrency exchange ‘CoinRecoil’. Such banking services are imperative for the business of the petitioner. Consequently, the business is stillborn,” ET reports read the writ petition.
According to Article 301, the freedom of trade and commerce throughout India. Singh said that in order to prevent banks from dealing with cryptocurrencies the government needs to ban the entity first, without which such a move from the central bank could be running in contravention to the law.
Kali Digital has made the RBI, the finance ministry and the GST Council respondents to the petition.
In the first week of this month, the RBI had released a statement directing all regulated entities, including banks, e-wallets, and payment gateway providers, to stop dealing with individuals and businesses in the partially banned cryptocurrencies.
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs (virtual currencies). Regulated entities which already provide such services shall exit the relationship within a specified time.” the RBI had said. The RBI, however, gave banks and other entities which are regulated by it and currently providing such services to exit the relationship within a period of three months.
Bitcoin exchanges such as Zebpay, Unocoin, CoinSecure, BuyUcoin and BTCX India are feeling the heat of sudden disruption in banking services. This is also affecting their services of deposits and withdrawals. The exchanges are also taking legal advises and are working on various tax structures to combat this clampdown.
Most of them are exploring to shift base to countries, which supportive to their businesses. Bitcoin transactions volumes spiked following the central bank ruling that triggered panic, to around 40 percent, with about 90 per cent of that being on the sell side, on Bitcoin exchanges.
Meanwhile, traders have been already running a campaign against RBI to rethink over its decision on virtual currency. The traders also reportedly plan to challenge the central bank before the Supreme Court.
Interestingly, the RBI has said it is also mulling the creation of a digital currency. An inter-departmental group, in this regard, has been constituted to study and provide guidance. The group is expected to submit its report by June.