Several crypto currency exchanges in India are mulling moving to the Supreme Court against what seems to be an informal diktat of the Reserve Bank of India (RBI), asking payment gateways and banks to desist from processing crypto and bitcoin related payments, as per a report in the Economic Times.
Earlier this month, it was reported in the press that most banks and payment gateways had stopped processing crypto currency payments based on an informal directive by RBI. Last week, even Paytm stopped all deposit and withdrawal transactions with crypto currency exchanges, leaving most Indian crypto exchange users to largely rely on Peer to Peer (P2P) transfers to do any transactions.
The crypto currency industry argues that any sort of diktat by RBI or other regulatory authorities to stop banking channels for exchanges leads to an almost total ban on the sector, besides eroding trust and credibility for the exchanges.
They further state that any such directive from RBI is in direct violation of the March 2020 Supreme Court order in Internet and Mobile Association of India (IAMAI) v. Reserve Bank of India (RBI) & Others, that quashed a April 2018 RBI circular asking banks and financial institutions to stop providing services to crypto currency exchanges.
It may also be argued that RBI is constrained from doing indirectly what it is prohibited from doing directly by the apex court. Other contentions pertaining to violation of fundamental right to trade and commerce and equality under Articles 14 and 19(1)(g) of the constitution are also likely to be raised by the digital currency industry.
It is still unclear as to when crypto exchanges, either as individual corporate entities or through an industry body like IAMAI would approach the Supreme Court, and whether they would be filing a contempt petition or application for clarification and directions on the March 2020 order or file a fresh petition altogether.
Further, since the Supreme Court is currently having summer vacation until 27th June, 2021 and is hearing only extremely urgent matters, it is unclear when the matter will be actually listed and heard. Interestingly, Justice Rohinton F. Nariman, the lead judge of the March 2020 judgment of IAMAI v. RBI is retiring on 12th August 2021.