Indian Startup Files Writ Petition against RBI for Banning Crypto Trades

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Writ Petition with the High Court of Delhi filed on Tuesday against RBI by Kali Digital Ecosystems

An Indian startup who plan to introduce a crypto exchange has filed a complaint against the RBI (Reserve bank of India) who decided to prohibit banks from permitting crypto services.

The startup, Kali Digital Ecosystems, has summoned a petition to the high court of Delhi against the RBI on Tuesday. The petition submitted to the Ministry of Finance and the Goods and Services Tax Council (GST Council) stated, “an appropriate writ, order or direction quashing the circular” which it describes as “arbitrary and unconstitutional.”

Initially, the company planned to originate its crypto exchange, CoinRecoil, in August 2018, and also mentioned in the petition that it has “undertaken substantial investment in this regard.” The company is, however, disappointed with the fact that it cannot operate due to the restrictions imposed on banking services by the RBI as reported previously.

The petition reads:

“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 of the Petitioner is stillborn on account of the Impugned Circular.”

Kali Digital Ecosystems explicitly asserts that RBI’s move disrupts the firm’s constitutional right to follow any profession, trade or business.

It also contends that RBI’s decision constitutes unfairness under the Constitution because it gives crypto services “differential treatment” without explanation.

This lack of justification, the company disputes, stems from the failure of RBI to define the range of the term “cryptocurrency sufficiently.” Because of this uncertainty, the term has sometimes been incorrectly applied to rewards programs, like airline miles.

Moreover, the company adds that the GST Council has devised “uncertainty” by neglecting to put forth crypto-specific tax laws, and is “adversely affecting” its business as a result. It requests the court to correct this by leading the Council to “frame appropriate regulation on cryptocurrencies.”

RBI’s circular was preceded by two warnings on cryptocurrencies, issued in 2013 and 2017 respectively. Notwithstanding its strict stance on cryptocurrencies, the Bank revealed in the circular that it is investigating the idea of issuing its own digital currency.

Suzat Fernandes

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