A group of eleven individuals have filed a writ petition in the Supreme Court challenging the Reserve Bank of India decision to block “essential services” like banking for cryptocurrency related businesses in India. The case has been listed for further hearing on May 17, 2018.
“Banking is an essential service. How can one deny access to an essential service when I’m not doing anything illegal? You have not declared VCs (virtual currencies) illegal in the country,” said one of the petitioners requesting anonymity.
The Reserve bank of India on April 6, 2018 mandated banks, e-wallets, and payment gateway providers to withdraw support for cryptocurrency exchanges and other businesses dealing with virtual currencies in India.
The writ petition filed by a group of eleven different representatives from various crypto related businesses challenges the constitutionality validity of the RBI’s decision.
The petition came up for hearing before the court of the Chief Justice of India on May 11, 2018. The Supreme Court issued notices to the RBI and Union of India after hearing the petition. The matter has been listed for further hearing on May 17, 2018.
A writ petition is usually filed for the speedy review of an issue. The RBI’s circular mandates financial institutions to block services by July 5, 2018 putting crypto-related businesses in a spot. In this case, the writ is primarily to see if the government action is constitutionally sound.
The writ petition - Rajdeep Singh v. Reserve Bank of India - is the fourth in the series of writ petitions against the RBI for blocking off banking services to cryptocurrency exchanges in India.
On April 6, 2018, Kali Digital Eco-systems Pvt. Ltd. which runs the exchange CoinRecoil filed a writ in the Delhi High Court on the grounds that the RBI circular infringes on their right to trade, that is guaranteed in our constitution.
A while after, another exchange moneytradecoin.com approached the High Court of Delhi challenging the RBI Circular. The Delhi High Court has clubbed these two cases that will come up for hearing on May 24, 2018.
On May 8, another joint writ petition was filed by four cryptocurrency exchanges in the Supreme Court against the RBI circular.
The Indian government has set up a committee under Subhash Chandra Garg, Secretary, Department of Economic Affairs that is currently working on a framework to regulate cryptocurrencies. The committee is yet to come out with its decision.
“The RBI has given an affidavit saying that there is a committee at the highest level in the Finance Ministry examining virtual currencies.. Coming up with a circular while awaiting a decision has a chilling effect on any kind of business dealing with virtual currencies,” the petitioner said.
The move by RBI has already resulted in the flight of many Indian blockchain startups and cryptocurrency exchanges. Many more are mulling the move to crypto-friendly nations like Australia, Estonia, Cayman Islands, Australia and the like.
The newest petition was tagged with two pending writ petitions filed in public interest. The two pending writs filed last year pertain to deciding the legality/illegality of cryptocurrencies in India.