An Indian startup planning to launch a crypto exchange has filed a complaint against the Reserve Bank of India’s (RBI) decision to bar banks from engaging with crypto services.
Kali Digital Ecosystems filed a writ petition with the High Court of Delhi on Tuesday against the RBI, the Ministry of Finance and the Goods and Services Tax Council (GST Council) seeking “an appropriate writ, order or direction quashing the circular” which it describes as “arbitrary and unconstitutional.”
The company initially planned to launch its crypto exchange, CoinRecoil, in August 2018, and said in the petition that it has “undertaken substantial investment in this regard.” However, the company now says it will be unable to operate due to the restrictions on banking services imposed by the RBI earlier this month, as previously reported.
The petition reads:
“On account of the Impugned Circular, the Petitioner will not be able to avail banking services to operate the cryptocurrency exchange ‘CoinRecoil.’ Such banking services are imperative for the business of the Petitioner. Consequently, the business of the Petitioner is stillborn on account of the Impugned Circular.”
Kali Digital Ecosystems specifically states that RBI’s move violates the firm’s constitutional right to practice any profession, trade or business.
It also argues that RBI’s decision constitutes discrimination under the Constitution, because it gives crypto services “differential treatment” without justification.
This lack of justification, the company contends, stems from the failure of RBI to adequately define the scope of the term “cryptocurrency.” Because of this ambiguity, the term has sometimes been wrongly applied to rewards programs, like airline miles.
Likewise, the company adds that the GST Council has created “uncertainty” by neglecting to put forth crypto-specific tax laws, and is “adversely affecting” its business as a result. It appeals to the court to correct this by directing the Council to “frame appropriate regulation on cryptocurrencies.”
RBI’s circular was preceeded by two warnings on cryptocurrencies, issued in 2013 and 2017 respectively. Despite its strict stance on cryptocurrencies, the Bank revealed in the circular that it is exploring the idea of issuing its own digital currency.
Bitcoin with rupee banknotes image via Shutterstock