Cryptocurrency exchanges to approach Supreme Court on RBI diktat

Cryptocurrency exchanges are set to approach the Supreme Court to seek direction on whether the Reserve Bank of India (RBI) can direct banks to stop dealing with them, despite an earlier ruling by the apex court quashing RBI’s order to ban cryptocurrencies. This comes after the RBI through an “informal” diktat asked banks to stop dealing with cryptocurrency exchanges.

In the last month or so, some of the banks have stopped providing services to the exchanges, which has led to a major disruption.

The exchanges were somehow managing their business through payment processing companies such as Paytm or P2P transactions.

However, Paytm too stopped providing services to the exchanges from last week, ET first reported on May 21.

The exchanges are now coming together to seek clarity around the payment choke.

Insiders say there is a growing discomfort as banks have restricted their services to facilitate transactions.

“Even after last year’s Supreme Court verdict where it quashed the RBI order to ban crypto transactions, the banks are not lending their services to crypto exchanges and crypto traders,” said Ashish Mehta, co-founder DigitX, a cryptocurrency exchange. “Keeping this issue in mind and the impact on business activity, most of the major crypto exchanges are looking to knock the door of the Supreme Court again to get a clear cut directive regarding banking services so that uninterrupted transaction services can be provided to the traders/investors.”

In April 2018, the RBI had issued a circular and asked all the financial institutions – banks and NBFCs – to stop providing services to cryptocurrency exchanges.

Following this, cryptocurrency exchanges had dragged the RBI to the Supreme Court.

Last year, the Supreme Court quashed RBI’s circular, paving way for cryptocurrency exchanges to restart their operations. Most banks queued up to offer services to cryptocurrency exchanges after the Supreme Court order till recently when the RBI again told banks to stop doing so.

“I am aware of the plan of exchanges as part of our association in IAMAI that we would like to approach the Supreme Court to get this sorted out,” said Sathvik Vishwanath, co-founder & CEO of Unocoin Technologies, one of the largest cryptocurrency exchanges in the country.

“Unocoin will also be a part of it as we believe in being a part of the entire industry rather than just being a single company and we would participate in the case in spite we are not affected by the RBI or banks for time being.”

According to the people in the know, the exchanges could file a petition in this regard anytime this week or next week.

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