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Reserve Bank of India Asked to Respond to Court Case Challenging Crypto Ban

Reserve Bank of India Asked to Respond to Court Case Challenging Crypto Ban

India’s central bank, the Reserve Bank of India (RBI), has been asked to respond to a legal challenge to its recent ban on bank dealings with cryptocurrencies by the Delhi High Court on a plea which claims that the ban violates the constitution.

The Times of India reports that the Delhi High Court has sought the response of the RBI, the Indian Ministry of Finance, and the Goods and Services Tax (GST) Council to “a plea challenging a circular which prohibits banks and financial institutions from providing any service in relation to virtual currencies.”

RBI issued the circular on April 6, preventing banks 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." An online petition to reverse the ban has already gained over 43,000 signatures.

Gujarat-based company Kali Digital Ecosystems Pvt Ltd, which raised an unspecified amount of money in its initial coin offering (ICO) for its token Kali Coin, filed the plea against RBI’s decision to ban banks from providing services to crypto companies. Kali Digital’s ICO was slated to fund a new cryptocurrency exchange called Coin Recall with aims to serve the Indian market and planned to launch in August of 2018.

In their plea, Kali Digital said that the company would be forced to shut down because they would not be able to “avail banking services” which are “imperative to the business.” Kali Digital filed an official claim on April 16, claiming that RBI’s ban violates constitutional articles allowing Indian citizens the right to any occupation, trade, or business and prohibiting discrimination between equals.

The plea seeks to reverse the ban on the ground that it is "arbitrary, unconstitutional and violative of the Constitution," but it also appealed to the Goods and Services Tax (GST) Council to "frame appropriate regulation on crypto-currencies."

The High Court of Delhi’s notice, issued by Judges S. Ravindra Bhat and A. K. Chawla, asks for a response from the RBI, the Finance Ministry, and the GST Council by May 24.

23 Apr 2018

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