The cryptocurrency frenzy has taken over the internet. Everybody is widely discussing the surge and decline of various cryptos recently. This year started with a good vibe for the crypto world. Digital currencies like Bitcoin, Ethereum, and Dogecoin skyrocketed in their prices within a short time. Ether hit a record high of US$3, 017 in May first week, making one of its creators Vitalik Buterin the youngest billionaire. Then, it was Dogecoin’s turn, in which it crossed a whopping US$80 million market cap. After Elon Musk’s comment on the dogecoin, its prices drastically fell. Lately, Bitcoin is also facing a huge decline along with other digital currency, due to Musk’s unanticipated statement to stop bitcoin exchanges.
The Indian Crypto market
Cryptocurrency sensation had captured the Indian market also. During the dogecoin surge, Indian crypto exchanges witnessed record-breaking trading volumes, and many popular exchanges crashed with soaring traffic. Trading cryptocurrency in India has never been easy. Although it is not completely banned in the country there have been speculations going around that crypto trade will face strict rules from the initial phase, this year.
Lately, cryptocurrency sale is under great pressure and China has already banned crypto trade in any form. Recent reports revealed that India is planning to appoint a new panel of experts to study the possibility of regulating the crypto trade and look into the technological enhancement of blockchain. As various reports suggest, India houses almost 15 million crypto traders and adopters and the largest cryptocurrency exchange WazirX.
Why are Indian Banks Declining Crypto?
Indian crypto investors were relieved after the news of a new panel and Finance minister Nirmala Sitharaman declaring that there will not be any outright ban on the currencies. However, the recent report by Livemint says that the Paytm Payments Bank has stopped providing support to cryptocurrency exchanges. The statements put out by Indian crypto exchanges WazirX and CoinSwitch Kuber revealed this move by Indian financial institutions.
Earlier the Reserve Bank of India (RBI) had informally asked banks to stop fending the crypto tradings. ICICI and Yes Bank had also cut ties with the exchanges. In the current scenario, crypto exchanges are trying to find better options for transactions in India.
WazirX stated that Paytm bank accounts would be unavailable to trade and hence users cannot transfer through IMPS or NEFT. Reports reveal that major exchanges including CoinSwitch Kuber, WazirX, and CoinDCX are unable to provide transactions through UPI payments as well. In order to commit trade, users should first convert digital assets in INR into USD on the WazirX P2P platform, in order to trade cryptos.
In the context where the Supreme Court had revoked RBI’s ban to trade cryptocurrency, it seems unfair for the banks to suspend the crypto transactions without any clear notice. While speaking to Hindu Business Line, Nischal Shetty, CEO, and Founder of WazirX said, “There seems to be confusion among the banking industry because they are not giving banking access to the crypto industry in India despite the Supreme Court verdict. We request banks in India to update their compliance teams about the Supreme Court ruling that set aside the RBI circular against the crypto.”
Only some banks have directed their payment gateways to not process the crypto transactions. These include both public and private banks like HDFC and the Union Bank of India. The most pervasive reason for this is the RBI circular and informal intimation to isolate crypto exchanges from performing transactions through Indian financial institutions. This situation is anticipated to improve in the coming weeks and without banking partners, crypto exchanges are finding it difficult to enable investments and trade. The financial institutions are going through confusion, which needs to be addressed, and RBI coming to a clear stance on this issue. Reports say that the National Payment Corporation of India has rejected a ban on crypto transitions and has asked the banks to make decisions on the basis of their specific compliance policies.
With the current pressure on the crypto market, Indian investors, exchanges and traders are in a huge dilemma unless the authorities come out with a clear statement.