The Reserve Bank of India (RBI) on April 6th revealed that in the space of three months, entities registered with them should cease from trading with cryptocurrencies or companies involved with cryptocurrencies.
Banks, mobile wallets, and domestic payment gateways are included in this ban. This is the first time any government entity has made a decision that will affect cryptocurrency trading in India. However, there was no ban on trading Cryptocurrencies, yet stopping banks from providing services to exchanges will greatly affect them given that they will not be able to process fiat payments.
Cryptocurrency exchanges have been profusely adding crypto-to crypto trading pairs which were non-existence prior to this to avoid the ban of their trading.
Zebpay, India’s largest cryptocurrency exchange last week announced six new crypto-to-crypto trading pairs. These included Ethereum, Bitcoin cash, and Ripple and against BTC. Unocoin, which is also another known exchange announced a new app where users will have the chance to trade popular cryptocurrencies against other cryptocurrencies.
Ajeet Khuana, the CEO of Zebpay in an interview noted, “Even if there was no RBI circular, the crypto to a crypto product would have happened. However, because of the circular and the fact that fiats may no longer be in the picture, it definitely did hurry up and encourage the solution sooner.”
It is projected that India has more than 5 million active users that are expected to increase. As the government ban fiat trades, traders have shifted to over the counter solutions such as LocalBitcoin. It is likely that India makes up less than 1% of daily volume, despite its large number of traders.
The RBI’s decision does not go down well with both traders and exchanges. Several exchanges including Coindelta, Koinex, ThroughBit, and CoinDCX have filed a complaint against the RBI in the Supreme Court while another exchange, CoilRecoil has gone to the Delhi High Court, accusing RBI of going against the Constitution by issuing a ban. The court had approved this case and a notice has been given to the RBI for a hearing on May 24th, 2018.