A second India-based company has filed a legal challenge to a new central bank policy that bars financial institutions from providing cryptocurrency exchanges with banking services.
According to regional news outlet Business Standard, Flintstone Technologies Private Limited — operator of cryptocurrency trading and storage platform MoneyTrade Coin — last week filed a plea before the Dehli High Court, arguing that the Reserve Bank of India’s (RBI) new policy is “arbitrary, unfair, and unconstitutional.”
“When we started our business, we wrote to all relevant ministries and officials to ensure that our business model was in line with all statutory guidelines. But these arbitrary decisions by regulators and certain financial institutions have jeopardized our business interests. Today, we have been made to look guilty in front of our investors for no fault of ours,” Flintstone director Amit Lakhanpal said in the petition.
The policy, first announced in a circular on April 6, prohibits institutions from offering bank accounts or other basic financial services to cryptocurrency exchanges and other companies that facilitate cryptocurrency trading. The RBI gave banks three months to comply with the order before it will begin taking enforcement action.
Several weeks later, the High Court of Dehli agreed to hear a plea on the matter from Kali Digital Ecosystems, a startup that had planned to launch a cryptocurrency exchange in August 2018 and had already invested significant capital into the project, which will be shelved if the RBI mandate takes effect.
Despite the banking blockade, there is a general consensus that the government will not take the ban a step further and prohibit cryptocurrency trading outright.
“There is a positive sentiment in the industry that the government will not ban trading in cryptocurrencies, and even if formal banking channels cannot be used, people can move to crypto-crypto trading platforms,” Shivam Thakral, chief executive of cryptocurrency exchange BuyUcoin, in a recent Reuters interview.
However, the ban will make it extremely difficult for companies to offer crypto-to-fiat trading pairs, so several Indian cryptocurrency exchanges have already launched crypto-to-crypto trading pairs ahead of the ban’s implementation.