India’s Supreme Court Keeps Ban on Banks’ Crypto Services, For Now
According to a team of Indian lawyers, the Supreme Court of India refused request for a temporary injunction against restrictions imposed on banks regarding cryptocurrency by the country’s central bank. The Reserve Bank of India (RBI) issued a circular essentially banning crypto services, which will remain in place at least until a formal hearing.
Indian Supreme Court Denies Grant of Injunction Against RBI
Crypto Kanoon (@cryptokanoon) is a group of lawyers active in the space concerned with regulatory analysis and legal awareness. They’ve been particular watchful of goings on regarding India’s central bank, RBI, and its recent circular demanding banks it serves shut down any business with cryptocurrency companies.
Through a petition challenging the RBI ban, enthusiasts hoped by this week to see some relief at the country’s highest court. An interim measure employed by most courts around the world is to cease a particularly controversial action until such time as a final decision can be made. And it was just such a move crypto advocates were hoping would be followed during the petition’s consideration: allow banks to continue serving cryptocurrency clients as they had prior to the RBI ban.
Yesterday, the Supreme Court instead declined an interim injunction, for now allowing the RBI ban to stay in place. It was a blow to the near dozen representatives from India’s crypto community. It is important to note that such a procedural decision theoretically has no bearing on the eventual outcome of the petition for relief itself. The case will return before the Supreme Court May 17th.
The Reserve Bank of India’s circular from April ordered “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.” The ban appears to be rather comprehensive in scope, including “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.”
Indian Crypto Community Pushes Back
West Bengal’s Dwaipayan Bhowmik was the originator of a petition, asking government to regulate cryptocurrencies such as bitcoin core (BTC). His request was to galvanize the various ministries, from the country’s Securities and Exchange Board (SEBI) to the Reserve Bank itself. Mr. Bhowmik was quoted by regional media as wishing “to prevent financial crimes such as money laundering, flesh trade, etc.”
A quirk of the judicial appeal process in the world’s second most populated country is to allow petitioners, no matter their side advocacy, to appeal together. Two petitioners are diametrically opposed on the issue, in other words, with one wanting an outright ban and the other wanting it formally recognized by the government. For his part, Mr. Bhowmik insisted he falls in neither camp. “I just want it to be regulated,” he said.
There is yet another case, filed by crypto exchange startup Coil Recoil and various exchanges, to be heard in the Delhi High Court May 24th. The two cases are unrelated. As reported in these pages, many felt “the RBI directive is arbitrary and a violation of the Constitution of India, and the court should therefore quash it. The document presented to the count, which news.Bitcoin.com has obtained, explains that due to the RBI Circular the company will not be able to secure banking services that are imperative for the business’ operations rendering it ‘stillborn.’”
Whatever the case, May promises to be a critical month for India’s crypto community.
Do you think India’s Supreme Court will overturn the RBI ban? Let us know in the comments section below.
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C. Edward Kelso