All Bans in Spite: India's Crypto Industry Blossoms
Main page Analytics, India, Cryptocurrency Exchanges, Cryptocurrency, Regulations
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Oct. 11, 2018
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A group of experts within the framework of the Ministry of Finance of India, which is tasked with proposing regulation of cryptocurrencies, recommends the creation of a Central bank digital currency (CBDC). The Quartz publication, quoting a high-ranking official aware of the discussions within the intergovernmental group, said that the group intends to propose the development of a state cryptocurrency on the blockchain, developed by order of the government. The officials also discussed the possibility of giving the cryptocurrency the name “Lakshmi” in honor of the Hindu goddess of wealth and prosperity.

Today, it also became known that Unocoin, the largest Indian cryptocurrency exchange with 1.2 million users, launches its own crypto ATMs. Images of its first digital asset operations began to appear on social networks. The news has already been confirmed by Sathvik Vishwanath, the CEO of the platform:

“It is true that we are launching our ATMs but we have not made the news public yet. We may need about a week more before we get this operational. Someone has spotted a machine and [they] are spreading the pic and speculation around.”

Those crypto ATMs that are already installed have instant deposit and withdrawal functions on the Unocoin exchange. Terminals do not accept debit and credit cards. Judging by the cryptocurrency logos applied to the devices, they serve bitcoin (Bitcoin), litecoin (LTC/USD), ethereum (ETH/USD), ripple (XRP/USD) and bitcoin cash (Bitcoin.Cash) operations.

This news came amid much less joyful crypto events in the country. Recall that the ban of the Central Bank of India on the maintenance of cryptocurrency exchanges entered into force on July 5. The Supreme Court of India refused to provide a temporary adjournment and lift the ban on the termination of the provision of services to companies of the cryptocurrency sector by regulated financial institutions and banks in the country.

The Reserve Bank of India (RBI) has prohibited organizations under its control from providing services to any individuals or companies whose activities are related to cryptocurrencies. Regulated RBI organizations were required to immediately stop providing services to any private individuals or companies dealing with virtual currencies. All institutions, including banks, were given no more than three months to break up relations with companies related to crypto.

India Upholds Crypto Ban

Later, the country's Supreme Court did not overturn the decision of the RBI to restrict the activities of companies associated with digital money. In September, the Indian Supreme Court was to hold a final hearing and render a verdict on the case of a ban on the participation of domestic banks in the cryptocurrency turnover. However, the final decision is delayed since only RBI answered the petition of cryptocurrency exchanges to revise the ban.

Therefore, the verdict is not rendered until now. Twitter account Crypto Kanoon oversees the regulation of the market in the country.

In late September, one of the largest trading platforms in India announced the suspension of all operations due to the fact that the government banned banks and other financial organizations to work with companies associated with digital money. A large Indian cryptocurrency exchange Zebpay suspended work. Representatives of the company explained that the platform could not continue to work due to the fact that all local banks refused to cooperate with it.

“Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain. However, the recent past has been extremely difficult. 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,” stated in Zebpay.

The company added that all unfinished transactions will be closed, and funds credited to customer accounts. The exchange will work as an electronic wallet - users will be able to replenish their account and withdraw money. Zebpay was forced to suspend its work due to the new rules that the Reserve Bank of India had previously introduced. The regulator has banned all local financial organizations from working with companies associated with digital money.

At the same time, more and more crypto exchanges in India are announcing the return of the possibility of depositing funds in a local fiat currency (INR) and its withdrawal, despite the ban on the service of crypto platforms by banks. On September 12, Koinex exchange announced the return of deposits and withdrawal to INR through its P2P system. Another crypto platform, Coindelta, announced the resumption of support for INR on August 31. Before this, the Giottus exchange also bypassed the ban of the Central Bank.

The three aforementioned exchanges use their own P2P service for making deposits and withdrawals in Indian rupees. There are also several other exchanges with similar P2P services that allow users to buy cryptocurrencies and receive cash in INR. For example, Wazirx has recently celebrated its six-month anniversary of the launch of a P2P service.

India's Ruling Party Accused of Bitcoin Scam

India is also actively fighting crypto fraud. New Delhi police detained Asif Ashraf Malkani, behind a multi-million dollar fraudulent scheme called KashhCoin (KASHH). For several months, Malkani was hiding in different cities across the country. KashhCoin was launched in 2016, and the following year a grand presentation event was held with the participation of many Bollywood celebrities. Then the cryptocurrency peaked at $0.048, but later fell to $0.00017.

Then Malkani and his team held several marketing events throughout India and Nepal, promising 1-2% of their income daily. After they attracted millions of U.S. dollars, the group stole investor funds. The investigation began at the end of 2017 when one of the victims reported a loss of $20,000 and then many other investors followed suit.

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