The dichotomy more than strategy towards cryptocurrency trading in India among the government and banks has caught crypto exchanges and their customers in the quagmire. There has been no formal ban on cryptos but some of the top banks in the nation had allegedly severed ties with crypto exchanges at a time when the government hinted towards re-seeking at the prospective of cryptos and a window to regulate the sector. According to crypto exchanges, many banks stopped facilitating bank transfers to crypto accounts last week by halting exchanges’ access to their application programming interfaces (APIs). Paytm Payments Bank followed suit when it stopped supporting crypto transactions, adding to the exchanges’ challenge of locating new banking partners. Here, WazirX, CoinDCX, BuyUcoin, other individuals have been on the getting finish.
“Paytm has been one of our banking partners. We are in active talks with them to seek more clarity on their stance and to work together towards reaching a resolution at the earliest,” Neeraj Khandelwal, CTO & Co-founder, CoinDCX told TheSpuzz Online. The exchange was exploring other payment channels even as its remittance operations had been presently functional through a third-party-based automated route and INR deposits by way of its other banking companion. The organization didn’t disclose its name.
Likewise, BuyUcoin had got Mobikwik’s payment gateway to serve shoppers with deposits. The organization mentioned that Paytm Payments Bank had suspended assistance to them devoid of providing any “official reason”. “We’re using Mobikwik Payment gateway. Banks have stopped payment gateway from giving their services to crypto companies. There are limits on payment gateway transfer, so people who want to invest more are facing a huge problem. We’re requesting RBI to give clarity to banks so they can allow banking to us,” Shivam Thakral, CEO, BuyUcoin told TheSpuzz Online.
Paytm Payments Bank didn’t reply to the e mail looking for comments for this story.
For WazirX, on the other hand, its P2P strategy was the only accessible solution at this time though the organization is in the “finishing stages” of adding new banking partners and bringing in many INR deposit choices for its customers to deposit funds to WazirX wallet. “We’re also working on an upgrade for the WazirX trading engine to accommodate the rapidly growing traffic and volume. It’s called Project Raftaar…the team is in constant conversations with the banks who are still holding on to the old (RBI) circular or don’t have any idea of how this is creating confusion,” Nischal Shetty, Founder and CEO, WazirX had mentioned lately in a organization statement following banks’ action. The organization didn’t have fresh comments on the matter.
Further, for India’s 1st small business-to-small business crypto trading exchange DigitX, which has been fortunate so far as it neither worked with Paytm Payments Bank or any of the banks stopping assistance to crypto exchanges, “peer-to-peer transactions can be facilitated by the exchanges. The crypto-crypto pairs can be traded. The biggest loss is loss of confidence in investors and the opportunity loss for the institutions who put in their money and energy in providing solutions/education/ awareness for this area among investors,” Ashish Mehta, Co-founder DigitX told TheSpuzz Online.
The most up-to-date move to quit or limit assistance to crypto exchanges by many banks which includes ICICI Bank, HDFC Bank, Kotak Mahindra Bank, and so forth., was most likely triggered by the RBI’s “informal” path to banks to withdraw assistance to crypto exchanges and traders, as per a current Reuters report. In April 2018, RBI had banned banks from supporting crypto transactions just after circumstances of fraud by way of virtual currencies had been reported. However, the Supreme Court had struck down the ban in March 2020. Among the causes cited was that cryptocurrencies had been not illegal although unregulated in India. Nonetheless, the implications of the existing move by RBI might have an effect on the ecosystem.
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ICICI Bank, HDFC Bank, and Kotak Mahindra Bank didn’t comment for this story. RBI spokesperson couldn’t be reached.
“Ban is at the retail level — where the retail customer is worried that if I send money to crypto exchange my account will be blocked — and at the institutional level where exchanges themselves keep having their accounts blocked. Retail customers have received emails from banks for shutting down their crypto-related accounts. This will hurt new players more because if the bank account gets shut, it is a huge challenge for customers. On the whole, it has created an environment of uncertainty. It is extremely bad to have an industry that doesn’t have bank accounts. Customers cannot trade when they want to. However, crypto being a global phenomenon, this should not have a real impact,” Ajeet Khurana, Venture Partner and Global Expert at Blockchain Founders Fund told TheSpuzz Online.
This, even so, also implies that new purchasers will not be in a position to enter the program and it may well have an effect on new shopping for of cryptocurrency. Banks’ selection to disengage with Indian exchanges had coincided with China reportedly banning its economic institutions and payment organizations from supporting cryptos. “Maybe we are trying to copy the Chinese but in China, at least there was some official directive unlike in India. The situation here also suggests that crypto price may be affected to some extent as I believe Indians contribute almost 10 per cent of the crypto market globally. Overall liquidity will get affected as new buyers are not entering the ecosystem. This means whom will you sell crypto to. And if there are no new buyers then selling will also be a problem. If this gets over in a week or two, then it is okay,” Atul Chatur, Co-founder, Antilles Cryptocurrency Ecosystem (ACE-X) told TheSpuzz Online.
While the alleged move by RBI seems in contrast to the government’s most likely work to regulate cryptocurrencies, Governor Shaktikanta Das had earlier maintained that there is no distinction of opinion among the central bank and the government more than cryptos. “I do not think there is any difference of opinion between the RBI and the Central government on cryptocurrencies,” Das had mentioned at the Times Network’s India Economic Conclave in March this year. Meanwhile, the government had currently indicated its intent to regulate cryptos. In what had possibly marked the 1st move by the government to do so, the Corporate Affairs Ministry had made it mandatory in March for organizations dealing with virtual currencies to disclose profit or loss incurred on crypto transactions and the quantity of cryptos they hold in their balance sheets.
The government had also mentioned that crypto gains are taxable as revenue and GST is applicable on services by crypto exchanges. “Irrespective of the nature of business, the total income for taxation shall include all income from whatever source derived…the gains arising from the transfer of cryptocurrencies/assets is liable to tax under a head of income,” Minister of State for Finance Ministry Anurag Singh Thakur had mentioned in response to a query in the Rajya Sabha in March.
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