The constant change of dates by the Supreme Court of India has left some disappointed on the outcome of the case against RBI's circular dated 6th April 2018 banning banking services to cryptocurrency exchanges.
However, in their writ petition four cryptocurrency exchanges from India have jointly filed a writ petition challenging the constitutional validity of RBI's circular. This writ petition has been filed as no. 373 of 2018 under Article 32 of the constitution.
To sum it up they have made a hard hitting response to the RBI which gives me hope that the industry might have a chance if the apex court considers these statements made against the RBI.
Past few weeks or so have been very slow moving with multiple date changes by the court. It had extremely difficult to gauge where this is going. However, I hope this will give some clarity. You can read the main points below.
Points raised in the writ petition:
- Legitimately registered and running business as per currently existing laws which was violated by RBI by discriminating against exchanges. Without any reasonable grounds defined by RBI in its circular or statement to Supreme Court.
- RBI's circular violated Article 19(1G) of the constitution of India- the right to business in India.
- While the state can impose reasonable restriction on businesses under reasonable restriction under article 19(6) but RBI imposed a complete prohibition.
- Right to life violated under Indian constitution. Right livelihood is part of Right to life and RBI has forced exchanges to shut down and lay off employees.
- Everything that is not forbidden by law is permitted. No law that has made cryptos illegal and therefore it is wrong to assume cryptos are illegal.
- Article 14 violated by RBI.
- Right to reputation (part of the constitution).
- Why was the prohibition brought in before the inter-disciplinary committee report on cryptocurrencies?
- Principle of natural justice (no prior discussion with stakeholders before prohibition)
- Part 3 of the constitution (Article 12 to Article 35) - fundamental rights have been violated and judicial review is must in this case. Because RBI had stated in its circular that no rights have been violated.
- No mention of cryptocurrencies in judicial, academic or legal definition in any financial acts including RBI act 1934, Banking Regulation Act 1949, Payment settlement act 2007. It is outside the purview of RBI's monetary policy making and hence outside purview of RBI.
- No statutory definition of VC.
- Ban hurts startup eco-system in India
- Fraudulent exercise of RBI's power.
- Risk of money laundering and terrorist funding is a risk that is present in other e-wallets as well.
- Why RBI didn't apply existing guidelines on KYC, AML and combating terrorist funding already applied to banks and other regulated entities on cryptocurrency exchanges?
- Doctrine of proportionality states that it is necessary to show fairness. RBI could have regulated or used licensing or used SEBI to regulate as it's an expert in regulating speculative markets but instead RBI banned banking services without regulation.
- RBI created FUD without explaining their prohibition and attempted to kill the growing cryptocurrency eco-system in India.
- Cryptoasset is a broad term, RBI did not define which cryptoassets are important and which ones are not when over a dozen countries are promoting blockchain and cryptocurrencies.
- More than 2 million users have been impacted by RBI's prohibition.
- RBI's decision caused loss to 250 crore daily turnover business.
- RBI's decision violates Essential services act of 1981. Banks suspended bank accounts of users involved in cryptocurrency trading including exchanges.
- Concept of reasonable restriction. No intelligence, care or deliberation applied prior to ban. No stakeholders were informed the reasons nor the research prior to ban.
As you can tell exchanges have come back with a killer response. This gives me hope for the days ahead.
Stay tuned to my blog for more updates on this matter.
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