Source: iStock/xavierarnau

The Reserve Bank of India (RBI), The Union of India through Secretary, Ministry of Finance and Goods and Services Tax Council will have to respond to the notice by the High Court of Delhi, regarding the recent ban on regulated financial institutions from providing any service in relation to cryptocurrencies, issued by RBI.

The order came on the plea by Gujarat-based company, Kali Digital Ecosystems Pvt Ltd, which was proposing to undertake the business of operating the cryptocurrency exchange CoinRecoil for customers within India, to be launched in August 2018.

Rashmi Deshpande, associate partner at a local law firm Khaitan & Co., said for the official press release, “The circular [issued by RBI] 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 argument backed by solid facts are the primary requirements under the Constitution to put a stop to any business in India.”

Apart from the RBI, the petition made by CoinRecoil included Union of India and Goods and Service Tax Council as respondents. According to them, Union of India has granted powers to RBI to issue the questionable circular, while the GST Council has “failed to introduce appropriate regulations with respect to cryptocurrencies in the Goods and Services Tax law.”

Since this move by the RBI already “put the burgeoning cryptocurrency sector in jeopardy,” in the words of Deshpande, the High Court hearing may be a way to save the industry in India.

The next court hearing is scheduled on the 24th of May.