RBI’s ban on crypto-related banking services has been challenged again. Maharashtra-based Flintstone Technologies has turned to the High Court in Delhi to seek withdrawal of the April 6 circular issued by the Reserve Bank of India, calling it “arbitrary, unfair and unconstitutional.” The company points out that the central bank has not provided any reasons for the imposed restrictions.
Also read: Indian Investors Flock to Trade Crypto Ahead of RBI Ban
RBI’s Ban Faces another Challenge
An Indian crypto trading company has raised another challenge to the ban imposed by the Reserve Bank of India on banking services offered to companies and individuals dealing with cryptocurrencies. Flintstone Technologies Private Limited has sought the withdrawal of RBI’s April 6 circular, filing a plea with the Delhi High Court. India’s central bank wants to prohibit commercial banks and other financial institutions from providing crypto-related services.
On Friday, the plea was listed for hearing before Justice Rajiv Shakdher, the Business Standard reported. According to the Indian outlet, Shakdher has asked the court’s registry to place it before the bench which is already hearing a similar matter. Earlier this month, Kali Digital Eco-Systems, the company that will be operating the new Coin Recoil exchange, appealed to the High Court against the recent crackdown on banks working with companies from the crypto sector.
In its petition, Flintstone Technologies contends that the central bank’ circular has “fenced” all regulated entities from providing services to any individual or business dealing in virtual currencies, without mentioning any reasons for its decision to impose the restrictions. RBI has given banks three months to comply with the order.
The Maharashtra-based company, which is a provider of online crypto wallet services for Bitcoin and Money trade coin, has also submitted that while central authorities are still studying the effect of cryptocurrencies without banning them completely, the RBI’s circular indirectly restricts their trade. It claims that the prohibition is “arbitrary, unfair and unconstitutional.”
Lack of Regulations Increases Uncertainty
According to the document issued by the central bank of India, the entities regulated by the RBI are prohibited from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies.” The other company that has challenged the ban, Kali Digital Ecosystems, has claimed that the lack of crypto regulations has “increased the uncertainty over the treatment of such transactions” and is adversely affecting its proposed business.
The Gujarat-based company says that the RBI directive is arbitrary and represents a violation of the Constitution of India. On April 22, the Delhi High Court asked relevant authorities, including the RBI and the Goods and Services Tax Council, for official responses on the plea.
The regulatory uncertainty and the broadening bank clampdown have seriously affected cryptocurrency exchanges in India. In March, representatives of the industry reported that the trading on local platforms had dropped significantly. Some companies have started looking for more favorable jurisdictions, as news.Bitcoin.com reported. Since the announcement of the upcoming restrictions, however, trading volumes in India have spiked again, with investors trying to take advantage of the window before the ban takes effect.
Do you expect the Indian government to eventually legalize crypto-related activities? Share your thoughts in the comments section below.
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