Banks will be banned from engaging in cryptocurrency-related companies starting July 5, 15 days before the Supreme Court hearing on whether the ban is unconstitutional.
The Indian Supreme Court has refused to grant interim relief on the Reserve Bank of India’s (RBI) circular banning banks from engaging with cryptocurrency-related entities. RBI is India’s central bank.
The move, if finalized, would make it severely difficult for crypto exchanges to operate, and essentially kill off any budding crypto start-ups in the country.
Despite a lack of research and assessment, the ban proceeds and will remain in force unless the Supreme Court overturns it through a hearing scheduled on July 20.
Start-ups have been fighting the circular since it was issued in April. Anirudh Rastogi, managing partner at TRA Law which represents four exchanges in the fight against the ban, says that the ban is unconstitutional.
“Our position in the writ petition is that the RBI circular should be set aside being unconstitutional at various levels,” Rastogi said. “A business cannot survive without access to the formal economy. Such denial is a violation of the petitioners’ fundamental right to trade and equality before law. If the objective is to prevent money laundering and other illicit activities, more proportionate means can be adopted that stop short of shutting down the business itself. Crypto exchanges can be subjected to AML and KYC guidelines, reporting obligations and monitoring just as these apply to other financial services,” he said.
Coinrecoil, an emerging cryptocurrency exchange in India, is also one of at least five companies that have taken the central bank to court. Coinrecoil co-founder and director Kunal Barchha says the move conflicts with the government’s own push for “Digital India,” and that they are ready to pivot depending on how the situation develops.
“The government seems confused and not bold enough to come up with concrete solution regarding the crypto industry in India. At one hand it is talking about Digital India and on the other hand it is not allowing crypto industry to sustain and grow. We are closely observing the situation and are in advance stage to shift entire operations to an established market with proper regulations in place.
We do hope that the present ban should reverse in future with proper research, as earlier it was noticed that the RBI imposed this ban without any sort of research,” Barchha said in a statement to CoinGeek.
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