Following India’s attempt to clamp down on cryptocurrency- related activities, things manifested a different outcome than the one which was expected. When the country’s central bank recently tried to ban Bitcoin activity, the institution now faces legal consequences for its decision.

India’s Central Bank Facing Legal Penalties

India has had a difficult relationship with Bitcoin and other cryptocurrencies from the beginning. And it appears that the situation will not be improving anytime soon. Even though the Reserve Bank of India is attempting to get cryptocurrency activity banned, it seems their efforts may prove to be pointless and even create more problems for them.

The Reserve Bank of India delivered a decree averting creditors from engaging financially with cryptocurrency exchanges. That is a big issue for such exchanges, especially those that have to deal with fiat currency deposits and withdrawals. Banks were instructed to gradually end their associations with exchanges in the period between April and July of this year. It is yet unknown how many banks have applied this so far.

Earlier this week, a petition was submitted to the Delhi High Court demanding the Reserve Bank’s verdict. According to Kali Digital Eco-Systems, the Indian constitution apparently does not permit for cryptocurrency activity to be completely banned, thus filing the petition.

While it is not the first account in which someone has stated that the central bank’s harsh actions are considered as unconstitutional, things might go down well in India. Without any official clarification given by RBI as to why such a crackdown is necessary and what purpose they want to achieve with it, it is obvious one could contest the decision course after this change of events.

The petition does not just refer to the Reserve Bank of India. It seems the purpose of this is to address the government of India and the GST Council. Since the government apparently is responsible for allowing the RBI to take these actions, the GST Council clashes with the current legalization of cryptocurrency regulation. Without clear procedures, a ban cannot be officially instated.

How these events will unfold is yet unknown. With other exchanges contesting the decision made by RBI in court as well, the outcome will be interesting to observe. Restricting trade on Bitcoin and similar currencies is not rational move, according to some industry specialists. For now, Indian traders remain focused on Bitcoin, considering that OTC trading is still a viable option for them.