Indian Crypto Exchange CoinRecoil Files Petition Against RBI’s Crypto Ban On Banks

News, Regulation | April 18, 2018 By:

Kali Digital Ecosystems, the operator of India-based crypto exchange CoinRecoil, has filed a writ petition in Delhi high court challenging Reserve Bank of India’s (RBI) decision to bar banks from dealing with any crypto-related business entity.

The RBI guidelines, which was released earlier this month, was applicable to any entities regulated by central bank. The central bank has given regulated entities three months to unwind their business relationships with crypto-related companies.

Kali Digital Eco-Systems has made the RBI, the Ministry of Finance, and the Goods and Services Tax Council (GST Council) respondents to the petition. The GST Council was named because there are no specific tax guidelines for cryptocurrency exchanges.

In the petition, the exchange operator said that the move to ban cryptocurrencies in India is unconstitutional, as it violates two Articles of the Indian constitution. Article 19(1)(g), which states that citizens enjoy the right to carry on any occupation, trade or business, and Article 14, which states that there should be no discrimination between equals. It also drew an analogy referring to reward points offered by airline companies and compared it with cryptocurrencies.

Kali Digital initially planned to launch CoinRecoil in August of this year, and said in the petition that it has “undertaken substantial investment in this regard.” However, RBI’s new guidelines has frozen operations of CoinRecoil, which was planning to offer a fiat-to-crypto exchange product.

“On account of the Impugned Circular, the Petitioner will not be able to avail banking services to operate the cryptocurrency exchange CoinRecoil,” the petition said. “Such banking services are imperative for the business of the Petitioner. Consequently, the business of the Petitioner is stillborn on account of the Impugned Circular.”

In a statement, CoinRecoil co-founder Kunal Barchha said that the official launch of the exchange is still scheduled for August. If not in India, then in some other foreign country. The exchange 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.

Local traders have also shown a strong disapproval of RBI’s new guidelines. A petition was also filed on Change.org to push the RBI to reverse its directives. The petition calls the RBI’s policies as “irrational” and has already reached over 42,000 signatures.

Rahul Raj, Co-Founder and CEO of Koinex, said that this unprecedented move by the RBI has stirred the market and impacted the industry at various levels.

“The exchanges have witnessed a steep decline in daily trade volumes and price fall for all tokens,” said Raj. “In addition, traders who were looking at long-term investment through crypto assets will suffer heavy losses, especially those who have made hefty investments, out of their livelihood savings.”