Indian cryptocurrency exchanges looking for leeway from RBI

Indian cryptocurrency exchanges looking for leeway from RBI

  • Cryptocurrency exchanges in India have sent an application to the country’s regulatory authority to reconsider the blanket ban.
  • Suggestions include implementing international best practices and integration of other financial products into the interface.
  • Some firms are looking for a deadline extension so that their case can be heard in court prior to the ban.

Cryptocurrency exchanges are looking for a chance in India even with the Reserve Bank of India’s (RBI) directive hanging over their heads. While some bitcoin exchanges are saying that the RBI’s ban should be lifted altogether, others are asking for a deadline extension.

What do they want?

Their request is simple. Instead of a blanket ban, which creates obstacles for all cryptocurrency exchanges, RBI should only enforce the ban on firms that have violated regulations.

A source told the Quartz that exchanges are ready to implement any suggestions made by regulator to address concerns. Know-your-customer (KYC) and anti-money laundering (AML) guidelines have already been outlined in the application that the petitioners have submitted to the RBI.

On top of that, the application includes suggestions about implementing international best practices and integrating financial products that will contribute towards customer protection.

The issue lies in the fact that any and all of this will only be useful once these exchanges come under regulatory purview. If the blanket ban remains, it’s not going to matter which policies are preferred or even followed.

Why now?

Here’s the story so far. On 5 April the RBI issued a notice directing all lenders to close up any bank accounts under their purview that belonged to cryptocurrency exchanges. Not only that, the lenders would also have to end all other business relationships with the exchanges as well.

This left cryptocurrency trading institutions with two options. They can either restructure their whole business plan, or close down altogether. Unwilling to go down that easy, the firms involved decided to take the RBI to court.

The next hearing at the Supreme Court is scheduled for 20 July. Though that might sound like it’s around the corner, in actuality it will mean that the hearing will only happen once the ban has been in effect for two weeks. Which is why, it’s no surprise that firms like Kali Digital Eco-systems Private Limited (KDEPL) are looking for an extension till 31 August.

In the last hearing, which happened in May, the Supreme Court put forth the idea that the concerned exchanges should directly engage with the RBI to make their case.