Crypto exchanges in India still struggling to secure banking partners

Published at: July 1, 2021

Commercial banks in India are reportedly reluctant to do business with crypto exchanges in the country.

According to Reuters on Thursday, crypto trading platforms in India are still finding it difficult to open accounts with financial institutions. While there is no crypto ban in India, banks are reportedly acting on the advice of the Reserve Bank of India (RBI) to shun cryptocurrency exchanges.

Back in May, the RBI clarified its position on the matter, stating that there was no prohibition against banks servicing crypto exchanges. Indeed, India’s Supreme Court overturned a previous RBI rule that prevented banks from offering account services to crypto trading platforms.

Lack of access to banking services causes major disruptions such as limiting the scope of instant settlements for withdrawals.

With banks remaining reticent, crypto exchanges in India are beginning to consider alternative payment providers. Collaborating with payment processing firms is becoming a suitable stop-gap measure for platforms looking to continue offering crypto/fiat trading pairs.

Smaller payment rails like the Mumbai-based Airpay are reportedly providing instant transfer services for exchanges like Coinswitch and Binance-owned WazirX. However, given India’s estimated 15 million cryptocurrency investors, such payment channels may likely prove inadequate.

To manage the situation, major platforms like WazirX are having to halt crypto/fiat trading on certain days with only peer-to-peer (P2P) transactions available. Some other exchanges are reportedly resorting to manual settlements for bank deposits and withdrawals.

Crypto exchange stakeholders say reliance on P2P channels and other alternative trading methods may expose users to fraudulent actors.

Related: Proposed crypto ban legislation reportedly under review by India’s government

In the absence of a regulatory framework for cryptocurrencies in India, exchanges in the country may likely continue to experience such struggles. As previously reported by Cointelegraph, the government is currently weighing its options regarding the best approach to regulating the crypto market.

Meanwhile, the RBI remains firm in its anti-crypto stance even as reports suggest that authorities in government are moving more towards nuanced regulations rather than an outright crypto ban.

Tags
Related Posts
India to reportedly ditch Bitcoin ban agenda in favor of asset classification
The tide may have finally turned for cryptocurrencies in India as reports indicate a softer stance by the government toward crypto. According to a report by The New Indian Express on Thursday, the government’s hostile stance toward Bitcoin (BTC) appears to be shifting toward more common-sense regulatory policies for cryptocurrencies. According to inside sources quoted by the publication, authorities have dropped earlier plans for a blanket Bitcoin ban in favor of classifying cryptocurrencies as an alternative asset class. The Securities and Exchange Board of India will reportedly be tasked with overseeing crypto regulations in the country in collaboration with the …
Bitcoin / June 10, 2021
Indian CoinDCX crypto exchange to go global in 2022, says exec
Ongoing uncertainty around cryptocurrency regulation in India isn't stopping domestic crypto companies from launching global offerings. Indian cryptocurrency exchange CoinDCX is preparing to move forward with its global crypto-to-crypto trading platform — dubbed Cosmex — in 2022, according to a senior executive at the company. Ramalingam Subramanian, head of brand, marketing and communications at CoinDCX, told Cointelegraph that CoinDCX has significant ambitions regarding the exchange’s global expansion as its upcoming platform will target a global audience. The firm initially announced the development of Cosmex in February 2021, planning to expand CoinDCX’s footprint to the global markets amid the increasing global …
Bitcoin / Dec. 9, 2021
$2.5T crypto market will not wait for nations to onboard: WazirX CEO
Indian entrepreneur and the CEO of crypto exchange WazirX Nischal Shetty envisions a race between countries to launch their local versions of central bank digital currencies (CBDC) in the coming year. Speaking to Cointelegraph, Shetty said that the year 2022 would be an extension of the ongoing discussions around crypto regulations, exchange-traded funds (ETFs) and the emergence of the metaverse: “We’re optimistic that we’ll get regulatory clarity, see institutional participation fuel retail adoption. We also expect to see more metaverse projects making an entrance.” Shetty pointed out that the crypto industry today — directly or indirectly — employs about 50,000 …
Adoption / Dec. 29, 2021
Indian taxman recovers $6.62M from WazirX for evading tax on commission
Indian crypto exchange WazirX has reportedly paid over $6.62 million (49.2 crore rupees) following non-payment of Goods and Services Tax (GST) on trade commissions. The total recovery includes the pending tax of $5.43 million (40.5 crore rupees), the interest and a penalty for non-payment. Government officials from the Central GST and Central Excise committee (CGST Mumbai Zone) recovered the funds from the crypto exchange after detecting a GST evasion of $5.43 million on the commissions. A typical GST fraud involves creating fake invoices without actually moving the goods between the seller and the buyer. Officers of CGST Mumbai East comm'te …
Blockchain / Jan. 1, 2022
Indian IT Ministry directs crypto exchanges to store user data for 5 years
The Indian Computer Emergency Response Team (CERT-in), which falls under the Ministry of Electronics and Information Technology, issued a new directive on Thursday, forcing crypto exchanges, virtual private network (VPN) providers and data centers to store a wide range of user data for up to five years. Under the newly issued directive, crypto exchanges operating in India will be required to store customers’ names, ownership patterns, contact information and various other data. Crypto exchanges and VPN services providers are also required to report any cyber incident within six hours of its occurrence and must hand over the collected data to …
Regulation / May 2, 2022