Indian Crypto Exchange Bites The Dust
Despite seemingly massive support for Bitcoin, crypto assets, and blockchain in India, one of the nation’s largest exchanges recently shuttered its operations. According to a blog post published Thursday, penned by a co-founder of Koinex, Rahul Raj, the platform will be closing operations immediately.
Raj, explaining that rationale behind this dramatic decision, cites “months of [regulatory] uncertainty and disruption”. This is in reference to India’s odd stance on digital assets, which has forced regulated financial institutions, including banks, to stop interacting with crypto exchanges, startups, and individuals in this ecosystem. Without a proper banking partner, it is no surprise that Koinex has been struggling, as, after all, fiat-to-crypto (and vice-versa) trades are a key part of any exchange. Raj expands:
The last 14 months have been tough to operate a digital assets trading business in India, on account of the closure of bank accounts holding user deposits… We have consistently been facing denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets.
This is far from the worst though. Earlier this month, the Bitcoin and crypto asset community woke up to a harrowing tidbit of news from Bloomberg Quint. An article, which cited a “draft bill”, revealed that regulators in India, from multiple financial and judiciary agencies, revealed that those who involve themselves in the “sale, purchase and issuance of all types” of crypto assets, including Bitcoin, could lead to a ten-year jail sentence and/or fine.
At the same time, the Reserve Bank of India and its partners have purportedly also proposed the creation of a “Digital Rupee” to fill in the void left by a ban on Bitcoin. This exact strategy has purportedly been “recommended by a panel headed by Economic Affairs Secretary Subhash Chandra Garg”, and has been backed by an array of other respected governmental agencies.
This article purportedly killed Koinex’s volume, with the platform’s co-founder claiming that this draft bill created a mass amount of “FUD” which resulted in a “sharp decline in trading volumes” and an anti-crypto stance from citizens of the nation. Per data from The Block, the volume on Koinex has, in fact, plummeted. Since hitting $9.7 million of aggregate volume in September 2018, this figure has been halved to $4.3 million. Ouch.
The weird thing is that as reported by Ethereum World News previously, the Reserve Bank of India has denied any involvement in any new crypto ban. In a statement issued June 4th (prior to this news), the central bank claimed that it is not aware of any new plan for a ban. They explain that they were not forwarded any draft bill, if it exists at all, from any fellow financial regulator in India, nor was in communication with any other agencies on the subject matter.
This doesn’t imply that the draft bill doesn’t exist though, yet the RBI should be involved if it truly is in the works.
Regardless, many note that if the ban was put in place — if it does exist after all — it may actually be a net benefit for the cryptocurrency space. This is in reference to the Streisand effect and the theory that consumers like to oppose government control in some settings.
Photo by Mitchell Ng Liang an on Unsplash