The Supreme court of India temporarily prohibited banks from servicing cryptocurrency companies

The Supreme court of India has turned down a request for a temporary ban on the introduction of restrictions on banks in relation to cryptocurrency companies by the Central Bank of India. In April, the Reserve Bank of India (RBI) released
circular prohibiting service to cryptocurrency firms, which will remain in force at least until a formal hearing.

Crypto Kanoon is a group of lawyers dedicated to analyzing the actions of regulators and increased legal awareness. In particular, they closely watched the actions of the Central Bank of India. Especially lawyers worried the circular issued by RBI for all commercial banks in the country, which has required financial institutions to stop servicing cryptocurrency companies.

Through the petition challenging the prohibition of RBI, the enthusiasts were hoping for this week to ban on the circular in the Supreme court of the country. Most courts in the world, as a rule, tend to ban the controversial actions until then, until a final decision is made. Exactly at this step kriptosistema hoped, suggesting that the court will allow the banks to continue to serve the cryptocurrency of the company, as it was before the RBI ban.

Yesterday the Supreme court instead refused to issue a temporary injunction, thus leaving in force the orders of RBI. This is despite the fact that at the end of April the Supreme court of India published
a notification addressed to the Reserve Bank (RBI), the Finance Ministry and Tax service (GST), which claimed that the decision of the RBI banning the cryptocurrency service business violates the Constitution of India.

The last court decision was a blow to almost a dozen representatives of the Indian cryptocurrency business. It is important to note that this procedural decision is theoretically irrelevant to the final outcome of the petition. The case will be returned to the Supreme court on may 17.

In the April order, the Reserve Bank of India stated that «from this point on the entities regulated by the Reserve Bank, can’t deal with virtual currencies or provide services to any person or organization when dealing with virtual currencies». The ban is comprehensive, it refers to «account management, registration, trading, settlement, clearing, loans for virtual tokens, accepting them as collateral, open accounts of the exchanges associated with them, as well as transfer/ receive money in accounts associated with buying/ selling virtual currencies».

Dwaipayan Bhavik (Dwaipayan Bhowmik) of West Bengal was the initiator of the petition calling on the government regulation of cryptocurrencies such as bitcoin. The petition demanded unification of the various ministries for this purpose, including the Council for the securities of India and Reserve Bank. Bhavik stated that he wants «to prevent financial crimes such as money laundering etc». Bromwich also noted that he is neither a proponent nor opponent of the crypto industry. According to him, he just wants «to industry was regulated».

In addition to petitions on the part of cryptocurrency enthusiasts, the court was filed another lawsuit from the exchange Coil Recoil and other online shopping sites. The claim will be reviewed by the Supreme court of Delhi on may 24. Many members of cryptozoologist believe that «the RBI Directive is oppressive and violates the Constitution of India and therefore the court should cancel it». In a document presented to the court, said that because of RBI circular, the company will not be able to obtain banking services, which are necessary for doing business. And this, according to representatives of the companies, dooming their company to failure.

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