The Delhi High Court has issued a notice to the Reserve Bank of India after an appeal was filed to scrap a notification that barred banks from supporting bitcoin related transactions.

Admitting a petition of Ahmedabad-based cryptocurrency exchange CoinRecoil (Kali Digital Eco-Systems Pvt Ltd), the Delhi High Court issued a notice to Reserve Bank of India, the Union of India through Secretary, Ministry of Finance and GST Council. The next hearing in this case is on May 24.

Reserve Bank of India had recently asked all the regulated entities, including banks, to stop from providing services to any individual or business dealing in digital currencies. The central bank had given three months to banks to end all existing relationships with bitcoin players.

Rashmi Deshpande, Associate Partner, Khaitan & Co, said: “The move by the RBI has put the burgeoning cryptocurrency sector in jeopardy and may affect the basic rights of such entities to carry on any trade. The circular appears to be arbitrary and unconstitutional since it does not give strong facts as to why the RBI is against the business of cryptocurrencies. A logical and well thought arguments backed by solid facts are the primary requirements under the Constitution to put a stop to any business in India.”

In its petition, CoinRecoil said the RBI’s circular intends to classify persons or entities dealing with or settling virtual currencies as equals. “The petitioner submits that there is no clear definition of what constitutes VCs either in the impugned circular or in any other legislation. This patent ambiguity evidently dilutes any reasonability in what may be alleged as a classification,” the petition said.

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