All eyes in the Indian cryptocurrency ecosystem are on the country’s top court. Starting today (July 20), the supreme court will resume hearings in the case that virtual currency exchanges have filed against the central bank’s measures that have stifled their businesses.
While the verdict itself may take a while to be pronounced, the proceedings will clear the government’s stance towards the industry and the Reserve Bank of India’s (RBI) reservations against bitcoin and its ilk.
In April, the RBI had directed banks to wind down all cryptocurrency-related accounts by the first week of July. Soon after, the bourses challenged this in the supreme court.
The RBI’s diktat has been primarily challenged by the firms on two grounds, said lawyers familiar with the case. These are article 19(1) (g) of the Indian constitution, which allows citizens to enjoy the right to carry on any occupation, trade, or business; and article 14, which prohibits discrimination and mandates equal protection under the law for all.
In earlier hearings, the court refused interim relief to these exchanges. Yet, the industry remains hopeful.
“Our expectation is that the hearing will be on the basis of merit where we get to present the case on why the RBI circular is unconstitutional and should be quashed,” said Rashmi Deshpande, associate partner at Khaitan & Co, a law firm representing Kali Digital Eco-Systems, an Indian exchange planning to begin operations later this year.
Cryptocurrency exchanges versus the RBI
The matter is being heard by chief justice Dipak Misra along with justices AM Khanwilkar and DY Chandrachud.
The attorney general of India (AGI), KK Venugopal, is also likely to be present for the hearing, following the court’s directive. “The union government is also a party in some of the cases, so that may be one of the reasons for calling the AGI,” a lawyer requesting anonymity had told Quartz earlier. “But it also clearly shows that the court thinks it’s a significant matter.”
The court had earlier ordered the bourses to engage with the RBI and they, over the last two months, have been urging the baking regulator to soften its stance. These exchanges have offered to open up for more scrutiny and regulation if the blanket ban is lifted.
However, earlier this month the central bank rejected their suggestions, citing investor protection, the anonymity of transactions, and the cryptocurrencies’ lack of intrinsic value.
Now, the government’s draft regulations for the sector is their last hope.