As the RBI released a circular asking Indian banks and regulated financial identities not to provide banking services to crypto companies, Indian exchanges are now left in a terrible state. While trading in or buying cryptocurrencies is still not illegal in India, the central bank’s decision to pull a full stop to banking for these services has hurt the exchanges.
As banks, non-banking financial institutions and payment banks are regulated by the RBI; the only option is to adopt crypto-to-crypto trading or look for state-owned entities like India Post. Failing to do either will ring the death bell for the exchanges. Many India-based crypto coin businesses are also moving to foreign soil to ensure their existence.
BFXC, a homegrown crypto player, will be cutting down staff in Delhi and moving its entire business to Dubai. Prashant Manu Wig, head of the company, said, “Our operational offices have started in Dubai & Georgia. Operations will also commence soon by May 2018.”
Following his footsteps is Amit Lakhanpal from the Al Kasir Group, another company moving to Dubai after finalizing a collaboration with a member of the royal family. The company’s plans to launch three coins namely Al Falah, Al Haqeek and Al-Mas will be operated from the Middle East now.
However, crypto exchanges in India are having a harder time fathoming the aftermath of the RBI circular. BuyUCoin founder and CEO Shivam Thakral is positive that they will find a way around the issue. He said, “There are many non-RBI entities like India Post, where we could have currency accounts. We will approach them and see how they react. It is not that all doors are closed for us and that we are shutting down everything. There are still many ways open for us.”
He added, “We are planning to shift our company’s headquarters to other countries. For this, we have two-three options in our mind like Singapore, US and one more. This plan would be set into motion in the worst-case scenario of the government asking cryptocurrency exchanges to shut operations in India. Then, we could just take our company abroad with crypto-to-crypto currency trading model. In India, it is fiat-to-crypto currency trading right now.”
His views were echoed by Unocoin founder and CEO Sathvik Vishwanath. “For the time being, we are trying different angles (to survive), which we cannot disclose. We want the current ecosystem and (cryptocurrency) industry to survive, without abruptly changing our model, where there is no exit point. Over the next couple of weeks, we may have more clarity on how we should take this forward,” Vishwanath said.
Most cryptocurrency exchanges in India have confirmed that they have not received any official withdrawal of service notice from the banks. The RBI has given banks a 3-months’ time to end banking relationships with these exchanges. SBI and a few other large Indian banks had already withdrawn support from several exchanges before.
Most Indian cryptocurrencies are currently in the ICO stage which. Meanwhile, RBI is considering the launch of its digital coin. The fog will be cleared by the end of the second quarter, but till then, markets could remain in a problematic state.