Business 14 May 2018

Erik Gibbs

Court junks RBI injunction over crypto exchange ban

In the ongoing battle between cryptocurrency exchanges and the Royal Bank of India (RBI), the bank is currently winning. Several cryptocurrency companies, including CoinRecoil and Flintstone Tech, have taken issue with RBI’s refusal to allow banks to do business with them, and has sought relief through the courts. While waiting for the opportunity to present their case, the exchanges had requested an injunction, but that has now been denied by the country’s Supreme Court.

The exchanges argued that the bank’s opinion violated India’s Constitution and the case was scheduled to be heard by the courts on May 17. At least 11 different crypto-related entities requested the injunction, which was turned down last Friday. Fortunately, the case goes before a judge in just a few days, so hopefully the businesses won’t have to wait long for a resolution.

The RBI made the decision last month, stating, “… it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs [virtual currencies] or provide services for facilitating any person or entity in dealing with or settling VCs.  Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/sale of VCs.”

Several cryptocurrency analysts, including expert tech investor Tim Draper, have voices their concern that RBI’s position could result in many crypto companies abandoning the country and going abroad. Draper has previously spoken out in favor of the country’s Prime Minister, Narendra Modi, and the efforts to curb money laundering and corruption, but has also said that India’s denial of digital currency as legal tender is “a huge mistake.”

Halfway around the world in South America, Chile has been dealing with its own internal dispute regarding crypto. A group of cryptocurrency exchanges last month launched an appeal to the courts to overturn a decision by virtually all of the country’s banks that outlaws crypto. Buda, CryptoMarket and Orionx have said that the decision by the banks is flawed because they have no power to control the financial industry. Toward the end of the month, Buda was able to convince Chile’s anti-monopoly court to reverse the bank’s decision, at least temporarily. Both the state-owned Banco del Estado de Chile and the Itau Corpbanca were ordered to unfreeze Buda’s accounts while the court proceedings continue.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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