Mumbai: Cryptocurrency exchanges will turn to the Supreme Court to clarify whether the Reserve Bank of India (RBI) can order banks to cease trading with them, despite the fact that the Apex court ruled earlier on the RBI’s order to ban of cryptocurrencies.
This happens after the RBI has requested the banks through an “informal” dictation to stop dealing with cryptocurrency exchanges.
In the past few months, some banks have stopped serving the exchanges, which has resulted in a major disruption.
The exchanges somehow managed their business through payment processing companies like Paytm or P2P transactions.
However, Paytm also stopped providing services to the exchanges last week, ET reported for the first time on May 21.
The exchanges are now coming together to clarify the payment throttle. Insiders say there is growing unease as banks have restricted their services to make transactions easier.
“Even after the Supreme Court ruling last year that the RBI order banning crypto transactions was lifted, banks are not lending their services to crypto exchanges and crypto traders,” said Ashish Mehta, co-founder of DigitX, one Cryptocurrency exchange. “Given this problem and the business impact, most of the major crypto exchanges are trying to knock on the door of the Supreme Court again for a clear policy on banking services so that they can provide uninterrupted transaction services to traders / investors. ”
Industry experts say several investors are struggling to deposit and withdraw funds from Indian-facing crypto exchanges.
“Many of them have not been able to take advantage of last week’s sharp decline,” said Amit Maheshwari, tax partner at AKM Global, a tax consultancy firm. “This uncertainty after the SC’s decision is not helping anyone and the crypto exchange would lose public trust if this political indecision persists. Changing partner banks every few days is a big problem for all crypto exchanges as well as for investors. There seems to be a division between what the government is proposing and what the RBI is doing. ”
In April 2018, banking regulators issued a circular urging all financial institutions – banks and NBFCs – to stop providing services to cryptocurrency exchanges.
Subsequently, the exchange of cryptocurrencies brought the RBI to the Supreme Court.
Last year, the Supreme Court overturned RBI’s circular allowing cryptocurrency exchanges to resume operations.
“I am aware of the plan of exchanges as part of our association in IAMAI that we would like to go to the Supreme Court to resolve this,” said Sathvik Vishwanath, co-founder and managing director of Unocoin Technologies, one of the largest cryptocurrency exchanges in the country. “Unocoin will also be a part of it as we believe we are part of the entire industry and not just a single company and we would take part in the case although we are not affected by the RBI or the banks for the time being. ”