India’s opinion of cryptocurrency has been slipping and the first to fall victim to the regulatory limbo is it’s oldest exchange Zebpay. Without regulations in place, cryptocurrrency exchanges must now halt all fintech services. The Central Bank of India is not legally allowed to transact in cryptocurrency or facilitate services for anything remotely related cryptocurrency trading.
This has prevented India’s citizens from using cryptocurrency as a digital asset for business transactions. Zebpay expresses in their blog post that it has been nearly impossible to continue on as banks shun all cryptocurrency exchanges. This leaves customers unable to deposit or transfer funds to and from exchanges to buy or liquidate digital assets. Negative policy and attitudes continue to thwart the Indian crypto community.
The bank ban on lenders that began in April 2018 has now evolved into a legal proceeding. The RBI has been taken to court in an attempt to reverse the decision, but this could be a lengthy process and not act as an immediate solution to Indian exchange woes.
Zebpay’s public statement states:
“The curb on bank accounts has crippled our, and our customer’s, 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.”
Zebpay’s shutdown is inextricably linked to the government’s anti-crypto policies. Zebpay was consistently compliant with government regulations, and this eventually resulted in their complete demise. All KYC and AML guidelines set out for exchanges over the years to prevent fraud and criminal activity was followed strictly by the Indian exchange giant. What does this mean for the future of crypto in India?
Since the ban, cryptocurrency exchanges have used peer-to-peer services to facilitate not only trading but deposits and withdrawals. Exchanges must use these circumventing methods to go avoid current regulations. General government indecision and punishment of those involved in cryptocurrency could be detrimental to overall technological development and inadvertently cause more backdoor and nefarious activity.
Like most other nations, it is now time to make clear-cut policies that enable cryptocurrency and blockchain technology definitively. India could be left behind in the digital asset revolution if they do not start to build a national infrastructure for the fintech industry.
Similar to China, while crypto is under attack blockchain development is very much encouraged and promoted. They plan to integrate the distributed ledger technology into their voting system and municipalities are starting to kick off their blockchain ID tests.
The future for blockchain and cryptocurrency in India is very much yet to be written. Government bodies will need to regroup and regulate the path to allow for growth and global digital enterprise.