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RBI prohibits banks and other financial institution

Supreme Court of India refused of giving any relief to Cryptocurrency investors against the ban of RBI in Cryptocurrency dealing. On April 6 central bank or RBI presented a circular stating that the banks and other financial institutions will not provide any kind of service in relation to virtual currency or Cryptocurrency. Then The Internet and Mobile Association of India (IAMAI), which represents internet firms, had filed a writ petition in the Supreme Court against the RBI move to ban banks and financial institutions from providing services to any individual or business dealing in cryptocurrencies. But the Supreme Court denied the petition.

Basically according to the RBI, the entities which are regulated under RBI have been barred from providing any service, including transfer of receipt of money in accounts relating to purchase or sale of virtual currency. It pushes towards peer to peer exchange. In P2P trade, the buyer and seller can deal with each other directly while the exchange acts as an escrow account that holds the crypto during the transaction to avoid cheating.

This news will have a drastic effect on Cryptocurrency trading platform, Cryptocurrency investment and the prices as well. People may start withdrawing their money because firstly the Cryptocurrency market is not regulated by any government or authority and secondly now the banks will not provide any help or service in dealing. Zebpay, one of the biggest digital crypto-exchanges in India, has already asked its clients to withdraw their funds before the deadline expires. A couple of Cryptocurrency exchanges including BTCXIndia and Ethexindia halted their trading.

This is basically the sad news because everyone was expecting Supreme Court to do a favor to the Cryptocurrency community especially when all the Cryptocurrency regulators across the globe are doing great job in embracing this technology.

Similarly Zimbabwe’s central bank has also banned financial institution from dealing in Cryptocurrency.

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Kali Digital petitions HC against RBI’s crypto ban on banks

Ahmedabad-based crypto firm Kali Digital Eco Systems, which runs a cryptocurrency exchange platform named CoinRecoil, has approached the Delhi High Court filing a petition against the Reserve Bank of India (RBI) recent guidelines which have banned banks from dealing with Indian cryptocurrency purchase/exchanges.

In the first week of this month, the RBI had released a statement directing all regulated entities, including banks, e-wallets, and payment gateway providers, to stop dealing with individuals and businesses in the partially banned cryptocurrencies.

The crypto firm states that the central bank guideline violates Articles 19 (1) (g) and 14 of the Constitution. Under Article 19(1) (g) of the Constitution, citizens enjoy the right to carry on any occupation, trade or business, while Article 14 prohibits discrimination between equals and Article 14 relating ‘Equality Before Law’ states that the State shall not deny any person equality before the law or the equal protection of the laws within the territory of India, prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.

While the respondents, in this case, are RBI, the Indian government and the GST Council, the next hearing is on May 24, 2018. The writ petition states, “On account of the impugned circular, the petitioner will not be able to avail banking services to operate the cryptocurrency exchange ‘CoinRecoil’. Such banking services are imperative for the business of the petitioner. Consequently, the business is stillborn,”

Mohit Singh, CEO of Ovakil.com, which acts as a legal advisor to many cryptocurrency players, said, “With this RBI restriction on banks to transact with cryptocurrency traders and exchanges, Article 301 of Indian Constitution also gets violated,”

According to Article 301, the freedom of trade and commerce is guaranteed throughout India. Singh said that in order to prevent banks from dealing with cryptocurrencies the government needs to ban the entity first, without which such a move from the central bank could be running in contravention to the law.

With this recent clampdown by the RBI, the cryptocurrency exchange platform within the country have been seeing really tough times as to if they should even keep their business continued or move overseas. With this petition filed against RBI, tables can turn and cryptocurrency purchases may be authenticated again via banks.