When regulators attempt to clamp down on Bitcoin and cryptocurrency activity, the public will respond in one way or another. In India, it seems things are heading in a completely different direction compared to what one would expect. With the central bank recently attempting to ban Bitcoin activity, the institution now faces legal ramifications for doing so.

India’s Central Bank in the Hot Seat

For as long as most cryptocurrency enthusiasts can remember, India has had a difficult relationship with Bitcoin and other cryptocurrencies. The situation has been uneasy from day one and will remain troubled for quite some time. Even though the Reserve Bank of India is looking to get Bitcoin and other cryptocurrency activity banned, it seems their efforts may be futile and even hinder their own activities.

To recap, the Reserve Bank of India issued a decree preventing lenders from doing business with cryptocurrency exchanges. That is a big problem for such exchanges, especially those which handle fiat currency deposits and withdrawals. Banks were told to slowly end their relationships with exchanges between April and July of this year. So far, it remains unclear how many banks have taken this notice into account.

If things were left up to the cryptocurrency industry and the general public, this new ruling would never be enforced. Earlier this week, a petition was filed with the Delhi High Court challenging the Reserve Bank’s decision. The Indian constitution seemingly does not allow for such a crackdown on cryptocurrency activity, according to Kali Digital Eco-Systems, which filed the petition.

While it is not the first time someone has claimed that such harsh action by a central bank is unconstitutional, it may work out in India. Without any official explanation by the RBI as to why such a crackdown is warranted and what they aim to achieve with it, it is evident one could challenge the decision process behind this turn of events.

It is also interesting to note that the petition does not just pertain to the Reserve Bank of India. It seems the goal is to address the government of India and the GST Council. Since the government seemingly carries the responsibility of empowering the RBI to take these measures, there is a clash with the GST Council’s ongoing formalization of cryptocurrency regulation. Without clear guidelines, a ban cannot be properly enforced.

How this situation will pan out exactly remains a bit unclear. With other exchanges potentially challenging the RBI’s decision in court as well, there is an interesting future ahead. Restricting the trading of Bitcoin and similar currencies is not reasonable, according to some industry experts. For now, Indian traders remain keen on Bitcoin, especially as OTC trading remains an option at their disposal.