Firm challenges ban on Bitcoins

Admitting a petition filed by Ahmedabad-based Kali Digital Ecosystems that has made substantial investment to launch cryptocoin exchange, the Delhi High Court has sought the response of the Reserve Bank, ministry of finance and the GST council on the recent RBI circular prohibiting banks and financial institutions from providing any services related to virtual currencies.

The company, which has planned to roll-out the cryptocurrency exchange (CoinRecoil) by August this year has challenged the constitutional validity of the recent RBI circular arguing that it violates article 19 (1) (g) of the constitution of India, which guarantee the right to carry on any occupation, trade or business.

“The move by the RBI has put the burgeoning cryptocurrency sector in jeopardy and may affect the basic rights of such entities to carry on any trade. The circular appears to be arbitrary and unconstitutional since it does not give strong facts as to why RBI is against the business of cryptocurrencies. A logical and well thought arguments backed by solid facts are the primary requirements under the constitution to put a stop to any business in India,” said Rashmi Deshpande, associate partner, Khaitan & Co, the advocate for the petitioner.

The circular issued by RBI on April 6 stated that entities regulated by the Reserve Bank should not deal in virtual currencies (VCs) or provide services for facilitating any person or entity in dealing with or settling VCs. The company in its petition argued that it would not be able to avail banking services to operate the cryptocoin exchange. “Such banking services are imperative for the business of the petitioner,” it said. The petitioner has also made the GST council a party to the case on the grounds that it has failed to introduce appropriate regulations with respect to cryptocurrencies in the GST laws.