A cryptocurrency exchange has asked the Delhi High Court to declare unconstitutional RBI’s circular prohibiting financial institutions from engaging in cryptocurrency business. The court has demanded a response from India’s central bank.
The Delhi High Court has demanded a response from the Reserve Bank of India (RBI) after a cryptocurrency exchange operator filed a petition claiming that RBI’s circular banning financial institutions from engaging with any businesses linked with digital currencies contravenes Indian laws.
The court order came after Ahmedabad-based CoinRecoil (Kali Digital Eco-Systems Pvt Ltd) asked the High Tribunal to declare RBI’s circular of April 6, 2018 unconstitutional. The document was issued under the title “Withdrawing Banking Support to Virtual Currency Exchanges.”
CoinRecoil submitted a writ petition before the Delhi High Court on April 16, 2018 to challenge the circular.
Reacting to the petition, Khaitan & Co associate partner Rashmi Deshpande commented:
“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 argument, backed by solid facts, are the primary requirements under the Constitution to put a stop to any business in India.”
The RBI circular prohibits financial institutions from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to purchase or sale of virtual currencies.”
Justices S Ravindra Bhat and AK Chawla issued a notice to the RBI, the finance ministry, and the GST Council, asking them to comment on the petition by CoinRecoil. The Delhi High Court has scheduled the next hearing for May 24, 2018.