Indian Cryptocurrency Exchanges Defiant in Face of Banking Ban

The Supreme Court of India in New Delhi. Several legal challenges to the Reserve Bank of India's move to restrict local banks servicing of cryptocurrency related businesses have ended before the highest judicial body in the land.
The Supreme Court of India in New Delhi. Several legal challenges to the Reserve Bank of India’s move to restrict local banks servicing of cryptocurrency related businesses have ended before the highest judicial body in the land.

Mumbai, INDIA – The Reserve Bank of India (RBI) may have had its day in court, but that hasn’t stopped enterprising cryptocurrency companies from finding alternatives to circumvent the central banks ban on financial institutions providing financial services to crypto-related companies. Two days ago, the Supreme Court of India, ruled in favor of the RBI and upheld its ban on financial institutions providing financial services, including banking and account services, to crypto-related companies. The case before the Supreme Court was brought as a public interest lawsuit, to determine the constitutionality of the RBI’s ban. But with the next court hearing set for July 20 and the ban already in effect, Zebpay, the largest cryptocurrency exchange in India by trading volume, said in a Tweet on Wednesday it had paused the Indian rupee deposit and withdrawal services until banks allow it again following the Supreme Court’s decision earlier this week.

A slum in Mumbai, India. A shocking one out of every five Indians is unbanked and has no access to financial services.
A slum in Mumbai, India. A shocking one out of every five Indians is unbanked and has no access to financial services.

However, Zebpay said that fiat-to-crypto and crypto-to-crypto trading services are still available and according to data from CoinMarketCap, Zebpay has still seen over US$5 million in trading volume in the past 24 hours. Ajeet Khurana, CEO of Zebpay, commented in,

In a similar move, several exchanges in India with relatively smaller volumes such as Coinome and Pexo also announced that they would suspend fiat currency deposit and withdrawal services for now.

Yet other Indian cryptocurrency exchanges remain defiant in the face of the RBI ban and have stated that they will continue to allow investors to deposit and withdraw fiat currency from their cryptocurrency trading accounts even though the RBI’s ban was meant to be effective on July 5.

Headquarters of the Reserve Bank of India in Mumbai. The RBI has banned banks from dealing with cryptocurrencies, leading many cryptocurrency players to source alternative means for their banking needs.
Headquarters of the Reserve Bank of India in Mumbai. The RBI has banned banks from dealing with cryptocurrencies, leading many cryptocurrency players to source alternative means for their banking needs.

BitBNS, a cryptocurrency exchange with a US$1.4 million 24-hour trading volume on CoinMarketCap, confirmed on Twitter on Tuesday that it will continue its Indian rupee deposit and withdrawal services, while another smaller cryptocurrency exchange KoinOK claimed its fiat currency deposit and withdrawal services are running fine in the face of the RBI ban.

Other cryptocurrency exchanges have resorted to over-the-counter or OTC trading to overcome the RBI ban. KoinEX, an exchange with around US$1.5 million 24-hour trading volume is working with WazirX to launch a peer-to-peer trading service called KoinLoop. The service is seen as a way to cut the exchange’s direct ties with banks so that investors can buy or sell cryptocurrencies in a peer-to-peer manner, without the need for a centralized intermediary According to WazirX’s CEO Nischal Shetty,

“If banking is something the exchanges are not allowed to do, then the solution is (to do) something that direct banking doesn’t come in.”

Despite the RBI ban, prior to a determination by the Indian Finance Ministry on the ultimate status and fate of cryptocurrencies, it is for the most part, more or less business as usual in some quarters of India’s crypto market and the resilience is cause to be optimistic.