BE/RBI NOTE/14/2018

An early stage crypto currency platform KALI DIGITAL ECO SYSTEMS, from Ahmedabad, which runs the crypto exchange CoinRecoil has filed a petition in the Delhi High Court for quashing the recent guidelines of Reserve Bank of India, which bans from dealing with any business entity dealing in cryptocurrencies.  The petitioner states that the guidelines violates Articles 19(1)(g) and 14 of the constitution.

The petitioner Kali Digital Eco-Systems, has further made RBI, Finance Ministry and the GST council as respondents for this violation Articles 19(1)(g) and 14 of the constitution states that an Indian Citizen enjoys the right to carry on any occupation, trade or business while Article 14 forbids discrimination between equals.  RBI has been given due powers by the Ministry the petitioner made GST council as another party to the petition, since it did not frame any taxation guidelines for crypto currency exchanges.


What does the petition add?

The impugned circular, handicaps the petitioner from availing banking services to operate cryptocurrency exchange CoinRecoil, which is essential for business of the petitioner, it adds.

The other facts related to the case are:

  • On 6th April 2018, RBI had issued a statement, that keeping in view the risks involved with cryptocurrencies, entities regulated by it were being barred from servicing any company dealing in cryptocurrencies which came in to effect immediately.
  • Experts feel that with such restriction, Article 301 of Indian Constitution gets violated, thus affecting several cryptocurrency players in the market.
  • Article 301 guarantees freed of trade and commerce throughout India. Thus, it is felt that in order to prevent banks from dealing with cryptocurrencies, the Government should ban the entity first, without which the RBI directives would be a violation of law.
  • The founder of RGM Legal who advise clients on initial coin exchanges adds that the problem is with identifying crypto assets as a currency which has an exchange value. Law empowers only RBI to issue currency, and this is the point, where the point arises.   RBI had in the past clearly expressed that it would not recognise such cryptos.

Let us wait for the consequences and the forthcoming developments…..

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