No respite for Indian cryptocurrency exchanges, SC refuses to stay RBI’s directive
Cryptocurrency Exchanges hope for respite against the RBI ban restricting banks from providing services to digital asset exchanges. The Supreme Court of India put paid to their hopes when it refused to grant a temporary stay on the RBI’s directive. According to a circular released by the RBI, banks and financial institutions have to cut ties with Indian crypto exchanges. The Reserve Bank of India has stipulated that this will be done by the 5th of July.
Following RBI’s directive to the banks, several cryptocurrency exchanges and traders appealed to the Supreme Court. They wanted the Supreme Court to grant a temporary stay on the ban. The hearing was initially scheduled for July 20th but was moved to July 3rd because RBI’s deadline was set for 5th. The Internet and Mobile Association of India requested that the hearing’s date be brought forward.
An RTI application filed by Varun Sethi revealed that no internal committee was set up by the RBI before the ban. The internal committee was supposed to conduct a research into the subject of digital currencies. And despite this, the Supreme Court has refused to stay the circular released by the Reserve Bank of India. The circular was issued after a two-day monetary policy committee meeting back in April.
Leading Indian crypto exchange, Zebpay has already notified its users that the rupee-to-cryptocurrency conversion service might end abruptly. The exchange further told its users that they can withdraw their money as long as the facility is available. Several Indian banks including SBI, HDFC, AXIS, YES, ICICI, and Kotak Mahindra have stopped services to cryptocurrency exchanges and traders.
Cryptocurrency and RBI haven’t got on well together. The banking regulator has issued several notices previously on the risk involved with cryptocurrency trading in India. Speaking at a press briefing on April 5th, B P Kanungo, RBI’s Deputy Governor said,
“Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.”
Expert’s state that Supreme Court’s refusal to stay the ban affects around 3 million crypto traders in India. They suggest that these individuals trade in Rs100 to 200 crores worth of cryptocurrencies every day.With the SC’s refusal, the life of cryptocurrency exchanges and traders in India will become infinitely more difficult. With banking services cut off, many of the exchanges could shut down or move to crypto friendly countries.
But, there are several other petitioners other than Internet and Mobile Association of India. Four other petitions have been filed in the Supreme Court and the Delhi High Court against the banking regulators circular. In addition to these, a Public Interest Litigation has been filed in the apex court related to Bitcoin regulations.
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