The Supreme Court of India declined to grant an interim injunction against the Reserve Bank of India (RBI) circular banning banking services for companies dealing in cryptocurrency, according to a Twitter post by Crypto Kanoon May 11. Crypto Kanoon is a team of Indian lawyers engaged in crypto regulatory analysis and legal awareness.
11 different representatives from various crypto-related businesses who filed a petition with the Indian Supreme Court sought an interim injunction against the circular. Court documents confirm that the injunction was denied and the case is still pending. The case will be heard again on May 17.
An interim injunction is a provisional measure sought during legal proceedings, before trial, requiring a party either to do a specific act, or to refrain from a specific act. They are intended to prevent unjust circumstances pending trial.
Last month, the RBI ordered regulated banks and payment platforms to “immediately suspend their services” to companies dealing with digital currencies. The RBI’s statement was met with public outcry as the bank’s move directly affected the interest of a great number of cryptocurrency companies and startups. The circular reads:
“… it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs [virtual currencies] or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.”
Tech investor Tim Draper warned that the move by RBI could cause a brain drain, in which Indian crypto and blockchain entrepreneurs take their business abroad due to restrictive regulations at home. While Draper approves of Prime Minister Narendra Modi’s crackdown on corruption, he called the government’s denial of crypto as legal tender “a huge mistake”.
In April, a group of cryptocurrency exchanges in Chile appealed to the courts to fight the decision of the country’s banks to close their accounts. The exchanges Buda, Orionx, and CryptoMarket (CryptoMKT), stated that the banking system in Chile was taking matters into their own hands and that they are “killing the entire industry.”