India's central bank sued for crackdown on cryptocurrencies

Kali Digital Eco-Systems filed a lawsuit against the Central Bank of India. India's complex relationship with virtual currencies and cryptocurrency operators will now be decided in court.

The RBI directive told banks to end their business relationships with crypto exchanges by July this year, signaling a shutdown for several companies in the Indian digital ecosystem.

In response, Kali Digital Eco-Systems filed a lawsuit.  The company planned to launch its own crypto exchange CoinRecoil in August 2018 and now the ban by the Reserve Bank of India will hinder commercial activities. The Ahmedabad-based firm believes that the RBI decision violates Articles 19 and 14 of the Indian Constitution. Rashmi Deshpande, a representative of the law firm Khaitan & Co, which defends the interests of Kali Digital Eco-Systems, believes such arguments, not supported by hard facts, can spell the end of any business in India. Deshpande calls the Directive unconstructive and does not provide convincing facts to justify the RBI's position against crypto businesses.

Kali Digital Eco-Systems' petition also includes claims against the Government of India and the Goods and Services Tax (GST) Council. The petition states that it was the government that allowed the RBI to take drastic and unjustified action against crypto market participants. However, the GST Council has also created the necessary regulatory rules for digital currencies, resulting in the present situation with regard to transaction processing.

Several other participants in the crypto market are also considering challenging the RBI directive in court.

Arirudh Rastogi, managing partner of law firm TRA, who represents several crypto platforms in the country, believes that “there is a right to trade and it cannot be limited in absolute terms. Only reasonable restrictions and not a complete ban can be introduced and enforced.”

Meanwhile, the Narendra Modi government has set up a committee to prepare a bill on Bitcoin and other cryptocurrencies. The panel's report is likely to be submitted by March 2019.

Read also:  The central banks of India and Pakistan will allow all financial service providers to serve clients carrying out cryptocurrency transactions.

                           The national regulator of India, represented by the Reserve Bank, has created a commission for the development of a national cryptocurrency