Cryptocurrency business in India will not be finding more takers as the Supreme Court has refused to put a stay on RBI circular till the matter is sub judice. The apex court has also ordered to club all petitions filed by various cryptocurrency firms and organizations like IAMAI as one. This is not all, the court has ordered that no high court in the country will entertain a petition that relates to the RBI circular on ‘Prohibition on dealing in Virtual Currencies’. This has effectively killed the case for the petitioners.
The writ petition filed by Siddharth Dalmia and several similar petitions were heard in court by a three-judge bench headed by the Chief Justice of India. Because of this order, a petition filed by Flintstone Technologies and Kali Digital, which was earlier scheduled for a May 22 hearing will now not be held. The two companies had filed the case against the circular in the Delhi High Court.
Another petition was filed by Ayushman Foundation to the Calcutta High Court which will also be removed now. The court has ordered the Registry to mention these transfer petitions. It will also issue a notice that will fix a returnable date within six weeks. Now, all these cases will be heard by the CJI headed bench in New Delhi. The bench has also reassured that it will listen to all petitioners.
The next hearing in these clubbed cases is scheduled for July 20 but it would be too late for the crypto companies. According to the Reserve Bank of India circular, issued on April 6, banks in the country were directed to terminate all their relationships with crypto companies with immediate effect. The banks cannot provide any service to these companies in any way. The ones who have an active ongoing relationship were given three months’ time to settle all transactions. The circular was issued a day after the top RBI officials announced that cryptocurrencies will not be supported by the Indian banking system.
The time limit for settling transactions is ending on June 6. Though digital coins have not been labeled ‘illegal’ in the country, the regulatory body has effectively ring-fenced to limit the community and its practices. The officials also suggested that the involvement of these coins in crime and terrorist funding is one of their main concerns.
The crypto companies, especially the exchanges that were operating in India are now left with no choice but to wait for the next hearing. In the meanwhile, some of them have moved to crypto-to-crypto trading. No users will be able to use their bank accounts, credit, or debit cards to buy digital coins for rupees or sell them off to get fiat money.
The markets are yet to respond to the news. When the circular was issued, panic selling drove the prices of currencies down by 20 to 30%. It is likely that exchanges will find innovative ways to circumvent the order or close. Meanwhile, RBI is studying the possibilities of a fiat-backed crypto coin.
