As a result of tightened regulations, Indian digital currency exchanges can no longer offer fiat-to-crypto trades for their customers. The Reserve Bank of India (RBI) originally placed a ban on crypto exchanges back in April, when the regulators forbade banks operating in the country provide local crypto exchanges with any of their services.
Even though the ban was appealed against, the Supreme Court refused to lift it on July 3rd and a couple of days later, all banks were forced to sever ties with crypto exchanges.
At the time Rashmi Deshpande, associate partner at a law firm Khaitan & Co claimed that “This is a big blow to not only cryptocurrency trading platforms, but also individuals holding cryptocurrency. The choking of banking channels means that virtually all cryptocurrency related transactions will have to be done in cash or not at all.“
Such drastic measures have forced the exchanges to adapt and even alter their business model. The local crypto platforms are now offering only crypto-to-crypto trading in a bid to save their businesses. Exchanges, such as Koinex, Unocoin or WazirX collect commissions in crypto, however another problem is now apparent, as, without having access to the rupee, they are forced to directly compete with industry giants like Binance, Huobi or OKEx.
Praveen Kumar, CEO and founder of Belfrics told that “There are measures that we are taking in the meantime, but for the industry to survive and thrive, fiat transactions need to be allowed. Else, we end up competing with all the other global exchanges that also offer crypto-to-crypto or P2P trade.“ Clearly this would inevitably mean the end for Indian crypto businesses, as local investors simply have no incentive to choose exchanges in India over global multi-billion dollar platforms.
The Supreme Court of India is expected to have another hearing, which will see local crypto aficionados state their case against the RBI ban. The date is set for July 20th and until then Indian virtual currency exchanges will have to rely on peer-to-peer trading. Coindelta launched its own platform just last week.
Coindelta announced a Peer to Peer exchange called Flux.
— Coin Crunch India (@coincrunchin) July 4, 2018
While many governments are still cautious about cryptocurrencies, there are very few that have introduced such rigorous regulations. What is more, the officials are stifling the growth of local blockchain industry, which has been dubbed the fourth industrial revolution and has been widely tipped to revolutionize numerous sectors. This could prove to be costly and we can only hope the Supreme Court will realize this sooner rather than later.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.