New cryptocurrency exchange CoinRecoil, based out of Ahmedabad, Gujarat is challenging Reserve Bank of India's recent order in Delhi high court. CoinRecoil is owned by Kali Digital Ecosystems Pvt. Ltd and has filed a writ petition against RBI's circular preventing all entities regulated by the RBI from rendering services to any business dealing with cryptocurrencies.
CoinRecoil is co-founded by Kunal Barchha and Gopal Modi. RBI's circular has stopped their plans of starting a cryptocurrency exchange.
As per my last report on this matter, all Indian banks currently associated with any cryptocurrency exchange were given 3 months to settle all outstanding payments and stop rendering services. This order is also applicable to mobile wallets and any other entity holding an RBI licence.
As per the report on Mint, "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.
Barchha said in his interview on Mint that their official launch is still scheduled for 8th August. If they are unable to do so in India, then they will operate in (some) other foreign country.
Kunal Barchha is also part of a FB crypto group and some of us directed questions to him and applauded him for taking this step against the RBI's decision. However, he declined to comment anything beyond what he has revealed to the press. I think that's only fair given the situation. But I hope to find out more as we go.
What is disappointing at the moment is large exchanges such as Zebpay and Unocoin haven't done anything substantial towards getting a stay on RBI's order. From what I've learnt so far, Unocoin has registered itself in Singapore and is expected to resume operations from Singapore if RBI circular holds ground after the 3 month period. This is great but we need bigwigs to fight the order and not run from it!
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.
This is the correct way to proceed IMHO. I'm also looking out for groups fighting this RBI order. If you come across any please let me know.
Many large markets are moving towards regulating this market while India takes a step backwards. However, the government isn't completely wrong in doing so.
They are ultra conservative and this is clearly a protectionist move. Large number of investors from India are clueless about cryptocurrencies and are only investing in hopes of overnight riches. Most are clueless about the nature of this market and tend to burn their fingers investing in ponzi or MLM schemes based on cryptocurrencies. This is one of the biggest issues plaguing the space today and the government is right in trying to clamp down on this.
But a ban prevents everyone from investing. But, that is also just convenient for our government. It's easier over precious spending time and resources in drafting and enforcing new policies for the knowledgable few interested in growing this space in India.
It is my hope that the Delhi high court orders a stay and pushes RBI to draft a policy at the earliest to make it easier for everyone.
Meanwhile, if you are interesting in buying or selling cryptocurrency you are free to do so without any issues. All the big exchanges are running perfectly fine. I've been using Coinome regularly and it is functioning great. Don't let the RBI FUD stop you from using your money anyway you want to do so.
Let us be smart investors and fight the government on important issues concerning our lives and livelihood. I'll be back with new updates on this matter soon.
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