India’s cryptocurrency exchanges may move the supreme court to challenge RBI crackdown

Still standing up.
Still standing up.
Image: Reuters/Dado Ruvic
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Indian cryptocurrency exchanges are not willing to go down without a fight.

Following the Reserve Bank of India’s (RBI) April 05 order, banks have asked cryptocurrency exchanges to close their accounts with lenders. Banks have also been directed to refuse loans to these bourses and to wind down all business relationships within the three-month deadline.

Pushed to the wall, the virtual-currency exchanges are now looking to challenge the central bank’s diktat in India’s supreme court.

“We are looking at filing a petition to challenge the RBI’s order. At the moment we are working on it and trying to figure out if we should get together with the other exchanges and do it collectively,” the head of a virtual currency exchange told Quartz, requesting anonymity.

The head of another such exchange, too, said the legal route was being explored, though he didn’t divulge details.

The last resort

The exchanges believe that the banking regulator has jumped the gun with its new order.

“It has come with this overarching order that can be challenged on several counts,” said Anirudh Rastogi, managing partner at law firm TRA that represents several bitcoin exchanges in the country. “There is a right to trade and it cannot be restricted in absolute terms. Only reasonable restrictions can be imposed and applied but a complete prohibition as restrictive as this was unnecessary.”

Rastogi added that perhaps the RBI’s motive was to safeguard the economy and investors against money laundering and terror financing, but a complete crackdown isn’t the only way to achieve it.

Besides, the government hasn’t banned digital currencies. A committee has been set up under Subhash Garg, secretary of economic affairs in the finance ministry, to prepare a draft law on virtual currency, which is likely to be submitted by March 2019.

Under these circumstances, players in the Indian virtual currency ecosystem believe that the RBI’s crackdown was unwarranted.

Meanwhile, an online petition urging the RBI to withdraw its decision is being circulated. Launched by Bitbns, another cryptocurrency exchange, it has already received over 26,000 signatures. “This is clearly stifling innovation around blockchain,” the petition says. “If a government does not facilitate adoption of new technology the country stands to (be) left behind.”