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Indian Cryptocurrency Exchanges Undeterred By Central Bank Crackdown; New Players Still Entering The Market

Last Updated March 4, 2021 5:07 PM
Shaurya Malwa
Last Updated March 4, 2021 5:07 PM

A famous quote says “Water always finds a way,” and this seems to be the motto of beleaguered Indian cryptocurrency exchanges, who are circumventing the Reserve Bank of India’s (RBI ) blanket ban on digital currencies by a flurry of methods.

Central Bank Tries To Shut Industry

A country of 1.4 billion, India undeniably had a large number of crypto-traders, who were specifically affected after a statement passed on April 5, 2018, outrightly forbade banks from providing any banking support to cryptocurrency exchanges. However, to prevent an immediate backlash, the banking authority gave a period of three months to ensure a smooth cut-off process.

The community raised their voice via forums and Public Interest Litigations (PILs), demanding the government to withdraw the statement. Quite understandably, traders feared the inevitable shut-down of exchanges, and a subsequent cut-off from cryptocurrency investing.

However, a recent report suggests that quite the opposite of a death knell happened, in fact, more cryptocurrency exchanges are planning to set up shop in the subcontinent.

Industry Fights back

Only two days after the ban issuance, CoinDCX  started its operations on April 7, and even provided its customers an option to track international trades in the Indian Rupee.

On track to launch in the second-half of 2018 are Alumma, an exchange registered in Singapore which shall place supreme focus on conducting strict background checks, and CoinRecoil, which gained fame before its opening for challenging an Indian High Court’s decision.

Their secret sauce lies in registering in other nations as a legitimate business, and betting on the presumption that cryptocurrencies have thus far not being termed “illegal.”

In spite of the crippling banking curbs on exchanges, cryptocurrencies like bitcoin aren’t illegal in India.

The presumptions are fairly grounded in reality, as the RBI has expressed interest in launching a state-backed digital currency, in addition to setting up a committee to study, research, and explore cryptocurrencies.

Lending insight in the matter is Kunal Barchha, Director of CoinRecoil:

“Whenever a new technology is introduced in the market then it faces criticism and steps are taken to stop its growth; the same thing is happening with virtual currencies.”

Barchha adds that Indians enjoy a significant purchasing power, and display a lot of interest towards investing in the risky asset class.  

From Crypto-Fiat to Crypto-Crypto

Established cryptocurrency exchanges, such as Koinex  and Zebpay , are switching their strategy and introducing crypto-to-crypto trading pairs.

Although this circumvents the ban on cash trading, it limits the scope to those who already hold cryptocurrencies. For a new trader, a peer-to-peer cash platform like Localbitcoins would have to be utilized to enter the crypto-market.

However, with this report in mind, it is confirmed that Indian cryptocurrency exchanges firmly believe in the technology and their businesses, and are here to stay. Thus, omitting any concerns of a sudden panic.

Featured image from Shutterstock.