Referring to the RBI's "curb on bank accounts" as the key reason for its decision, one of the biggest cryptocurrency exchanges in India, Zebpay, moves to suspend its operations in the country. Will the other exchanges follow?
28 September 2018 – One of India’s largest cryptocurrency exchanges, Zebpay, is reportedly preparing to shut its doors. It seems like the pressure from the Indian Central Bank has had its effect.
RBI Limits Banking Crypto Activities
AtoZ Markets reported earlier this April that on the 5th of April, the RBI has published a statement from the Chief General Manager Jose J. Kattoor in relation to the development and regulatory policies. He has spoken regarding RBI’s approach to virtual currencies, as he also has addressed the prospect of central bank digital currency (CBDC).
Kattoor has written in his statement:
"It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs," wrote Kattoor. "Regulated entities which already provide such services shall exit the relationship within a specified time."
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Reportedly, that time, the Deputy Governor Bibhu Prasad Kanugo has stated that central bank-regulated firms that are dealing with cryptocurrency related businesses will have a deadline of three months to finish their relationships.
As Indian Central Bank has banned banks from undertaking any cryptocurrency-related transactions, many cryptocurrency exchanges found it difficult to survive in such conditions.
Zebpay Halts Operations
Zebpay issued a blog post, where the company explained its decision:
“The curb on bank accounts has crippled our, and our customers’, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business. As a result, we are stopping our exchange activities.”
After the RBI has imposed harsh restrictions on banks’ activities, Indian cryptocurrency exchanges took central bank along with other government agencies to court. The legal battle about the cryptocurrency freedom has been going on for several months. Indian Supreme Court is still expected to rule on the matter.
Zebpay further writes in its announcement:
“Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain. However, the recent past has been extremely difficult.”
Zebpay was established back in 2015, and it rapidly became one of the most popular exchanges in the country. Reportedly, the exchange managed to reach 200,000 app downloads and an annuals turnover of Rs500 crore in a period of less than two years.
Sandeep Goenka, the founder of the company, has been quoted as saying:
“The extent of interest in bitcoins is at unprecedented levels. Every time prices increase, investors who were sitting on the fence and were skeptical do enter the ecosystem.”
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