Leading cryptocurrency exchanges, including WazirX and CoinSwitch Kuber, have suspended rupee deposits for new users on their platforms after some banks severed ties with them citing an informal guidance from the Reserve Bank of India (RBI), as reported by Livemint.
The regulator’s move has come despite the Supreme Court in March last year quashing a ban on crypto related payments.
The RBI has informally told lenders to stay away from businesses dealing in cryptocurrencies, though there is no official communication in this regard, said a banker, on condition of anonymity.
As RBI is the regulator, banks have decided to go with what it says and wait for clarity on the Supreme Court order, the banker said. The central bank did not respond to a request for comment.
“This lack of clarity, which is coming through the RBI, is hurting the crypto industry. There are multiple paths that we have been exploring because we believe in talking to the banks directly. However, if the entire industry gets cut off, we might have to take the legal route,” said the chief executive officer (CEO) of a cryptocurrency exchange, seeking of anonymity.
New users are not able to deposit rupees on their platform as their banking partner is unable to create new virtual accounts, according to WazirX, which is one of the exchanges impacted. “Unfortunately, this is an industry-wide issue and all Indian crypto exchanges are facing a limitation in rupee deposits right now. We are working on adding more banking partners to support the increasing volume of INR deposits,” said Nischal Shetty, CEO, WazirX.
The problem comes at a time when the crypto industry has been witnessing a boom in terms of new users and volumes since the start of the year. There are more than 10 million crypto investors in India with total holdings worth over $1 billion, according to industry estimates.