India's judiciary has thrust itself into the nation's escalating cryptocurrency debate. The Delhi High Court has directed the Reserve Bank of India, the Ministry of Finance, and the Goods and Services
India's judiciary has thrust itself into the nation's escalating cryptocurrency debate. The Delhi High Court has directed the Reserve Bank of India, the Ministry of Finance, and the Goods and Services Tax Council to respond to petitions challenging banking restrictions placed on digital currency platforms.
Kali Digital Eco-Systems initiated this legal action after the RBI's April 5 announcement effectively banned regulated financial institutions from transacting with cryptocurrency businesses. The company, which intended to debut its CoinRecoil exchange platform this coming August, cannot proceed without access to banking infrastructure. This fundamental requirement has become impossible under the new directive.
The RBI's statement was unequivocal. Starting immediately, all RBI-regulated entities must sever ties with cryptocurrency ventures. Those already providing services had until July to exit these relationships entirely.
Kali Digital's lawsuit questions the constitutionality of this approach. The petition invokes Article 19(1)(g) of the Indian Constitution, which guarantees citizens the right to pursue any profession or business. It also cites Article 14, protecting citizens from discrimination and ensuring equal protection. Legal counsel Rashmi Deshpande of Khaitan & Co, representing Kali Digital, characterized the circular as "arbitrary and unconstitutional since it does not give strong facts as to why RBI is against the business of cryptocurrencies. Logical and well-thought argument backed by solid facts are the primary requirements under the constitution to put a stop to any business in India."
The company's petition extends beyond mere judicial recourse. A grassroots campaign has gathered more than 43,500 signatures demanding the RBI reverse its position. Additionally, the legal filing asks the GST Council to develop a proper regulatory framework, arguing that regulatory ambiguity rather than any genuine risk has created the current impasse.
The broader complaint asserts that absence of clear rules—not prohibition—should be the government's response. By establishing legitimate oversight mechanisms instead of outright banking exclusion, the petition contends, India could address legitimate concerns while permitting legitimate business operations.
On social media, crypto advocates have amplified this argument. A user identified as Pomp stated: "This won't be the last time the existing financial system violates the rights of citizens to try to protect their monopoly."
Government agencies have been asked to submit their formal responses by May 24.
