India’s largest and most popular bitcoin exchange – ZebPay officially shut it’s doors last week, by sending out an official email to all users stating:
“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.”
Multiple government agencies have scrutinised the Indian cryptocurrency companies in the past year. The Income-Tax (I-T) department looked into crypto exchanges finances to determine taxation on bitcoin investments and trading gains. Subsequently, the ED (enforcement directorate) launched a probe to check for violation of the Foreign Exchange Management Act (FEMA). In December 2017, the Reserve Bank of India (RBI) asked banks not to facilitate any cryptocurrency-related transactions. Most top banks suspended accounts of major bitcoin exchanges in India, which forced the exchanges agencies to tie up with smaller banks. In April this year, the RBI finally put a blanket ban on any cryptocurrency transactions by Indian banks.
ZebPay, in particular, is offering no solution to users who have funds on their platform. I spoke to a ZebPay user, Joe (name changed), here was his experience:
“I transferred some funds to ZebPay back in November of last year, but never purchased Bitcoins with those funds. I maintained an Indian Rupee (INR) balance on my ZebPay account. I spoke to their customer service representative today who informed me that there is nothing they can do right now because INR deposits and withdrawals have been stopped and trading has also been halted. This was the official response given by ZebPay’s customer service executive. What am I to do?”
In effect, ZebPay are holding Joe’s rupees to indefinite ransom.
There have been various reports that the ministry of finance and the RBI have formed a committee to look into cryptocurrency and draft regulations for the same, however no such committee has been formally announced, nor has any draft been produced as on date.