Bengaluru: Ahmedabad-based cryptocurrency exchange CoinRecoil, owned by Kali Digital Ecosystems Pvt. Ltd, has filed a writ petition in Delhi high court challenging Reserve Bank of India’s (RBI) recent circular which prohibited entities regulated by RBI from dealing with cryptocurrencies.
Mint has reviewed a copy of the petition.
The RBI notice was applicable to banks, mobile wallets holding a payment instrument licence, as well as any entity holding an RBI licence. Banks were also given 3 months to settle all outstanding payments with crypto exchanges in India.
CoinRecoil’s petition challenged RBI on grounds that its circular violated CoinRecoil’s fundamental right to practice any profession, trade or business, guaranteed under Article 19(1)(g) of the Constitution.
The petition also said that RBI’s order violated CoinRecoil’s right to be treated as equal before the law, guaranteed under Article 14 of the Constitution.
The petition also drew an analogy referring to reward points offered by airline companies and compared it with virtual currencies.
“The petitioner (CoinRecoil) submits that any classification based on the evidently ambiguous nature of the term VCs is bound to result in an absurd classification of unequals, such as airline miles that offer reward points and cryptocurrency," the petition said.
CoinRecoil was co-founded by Kunal Barchha and Gopal Modi, and its official launch was scheduled to take place on 8 August. However, RBI’s circular has frozen operations of the exchange which was planning to offer a fiat-to-crypto exchange product.
Barchha told Mint that the official launch is still scheduled for August. “If not in India, then in (some) other foreign country," he added.
CoinRecoil had already put out a pre-initial coin offering (ICO) last month and had held talks with potential partners in countries like Canada, Singapore, and Australia as part of its expansion strategy, according to its earlier statement in March.
According to Mathew Chacko, partner, Spice Route Legal, there could be more additional amendments and arguments to the current petition once the hearing starts. “I also expect more people, companies, crypto organizations, and policy teams joining the case against RBI."
“I think the court may stay its order and provide RBI a pre-defined time of up to 6 months, and provide a directive to the RBI asking it to come out with a proper regulation for cryptocurrencies," Chacko added.