Another Cryptocurrency Startup Downs Shutters In India
RBI had last year directed banks to stop providing services to any individual or business dealing in cryptocurrencies.
Crypto exchange Koinex has shut operations in India citing regulatory uncertainty and disruption caused by the central bank’s virtual ban on cryptocurrencies.
This comes 14 months after the Reserve Bank of India banned regulated entities from providing services to any individual or business dealing in digital currencies. Zebpay, one of India’s largest crypto exchanges, had shut down in September last year.
The Mumbai-based exchange on Thursday said it will disable all its digital assets trading services on June 27. Rahul Raj, co-founder of Koinex, in a blog post said that all open orders after this deadline will be automatically cancelled and the funds will be returned to the corresponding wallets.
“In the course of the next five weeks, we will attempt to release all user deposits to their registered bank accounts after levying a convenience fee between Rs 10-2,000,” Raj said, adding that since the bank accounts with users’ deposits are still frozen, the firm has made arrangements from their own resources and will return it to users.
The digital wallet, however, will continue to be functional, and users are required to withdraw all funds from the platform by 9 pm on July 15, 2019, following which pending funds will be forfeited, he said.
The company’s growth curve, according to Raj, was cut short by the RBI’s April 2018 circular. “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,” Raj wrote in the blog.
BloombergQuint reported earlier this month that the government’s draft bill on such assets proposes a jail term of one to 10 years for those who mine, hold or sell cryptocurrencies. This, Raj wrote, has created fear, uncertainty and doubt in the community and has further added to the sharp decline in trading volumes.
Besides, the company said it has consistently faced denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets. “Even for non-crypto transactions like payment of salary, rent and purchase of equipment, our team members, service providers and vendors have had to answer questions from their respective banks—just because of an association with a digital assets exchange operator,” Raj wrote in the post. “The infrastructure cost alone for operating the exchange platform and ensuring the safety and security of users’ funds is unbelievably high.”