Kali Digital Eco-Systems, a crypto startup in India, is planning on introducing a new cryptocurrency exchange and has issued an injunction to challenge the country’s central bank ahead of the launch.
The Reserve Bank of India (RBI) has recently announced the tightening of the rules on service providing from banks to Bitcoin related companies. Kali Digital has filed a writ petition at the Delhi High Court seeking to nullify the RBI’s order, deeming it “unconstitutional” on the grounds of two reasons under Articles 14 and 19 of the Constitution of India.
According to the constitution, Article 14 outlaws any discrimination based on arbitrary or unreasonable classification and, according to the petition, the RBI has not offered clarity on the ambiguous definition of what a ‘virtual currency’ is, which weakens any reasonable claim in what something might allegedly be classified as. For example, reward points such as air miles might fall unreasonably under the classification. Article 19 guarantees citizen’s the rights to carry on any occupation, business or trading – and the bank’s directive is stripping this right in the deterrence of exchanges’ access to banking services as well as people from engaging in their preferred business.
Kali Digital was planning to launch the cryptocurrency exchange dubbed ‘Coin Recoil’, in August this year, and the company expressed that it has “already undertaken [a] substantial investment in this regard”. This implies that if the central bank’s mandate holds, the result would be a massive knock for the company, as it would not be able to operate the exchange legally.
According to CNN, an excerpt from the petition reads that on account of the “Impugned Circular, the Petitioner will not be able to avail banking services in connection with operating the cryptocurrency exchange. In the absence of banking services, the Petitioner will not be able to conduct the proposed business.”
Cryptocurrency focused companies in Israel have faced a similar situation, and it was a triumphant event when the country’s Supreme Court prevented banks from interfering in activity related to Bitcoin and digital currency. Although the authority of a commercial bank and that of a central bank are vastly different, the case in India has the backing of the current 42,000 Indians who have signed the petition online which is fighting RBI’s mandate.