According to an Economic Times report on January 20, some banks including State Bank of India, HDFC Bank, Axis Bank, Yes Bank and ICICI Bank have imposed restrictions or suspended several accounts of cryptocurrency exchanges over the past few days. RupeeIQ does not have independent confirmation of this development.
The banks have also asked for more collateral for money borrowed by these exchanges and have capped cash withdrawals from them. Action has been initiated against 10 exchanges including Zebpay, Unocoin, Coinsecure and BtcxIndia, the report said, quoting unnamed sources.
However, the report quoted Sathvik Vishwanath, promoter of Unocoin, as saying, “The banks have not contacted the company or the promoters regarding the actions you have mentioned.”
The banks’ action follows the statements from the Finance Ministry stating that bitcoin was a ‘Ponzi Scheme’ and is not legal tender in India. The ET report estimates, quoting unnamed tax officials, that these exchanges have a turnover of Rs 40,000 crore without mentioning in what time frame they have registered this.
Legal or Illegal
Bitcoin is neither explicitly legal nor is it illegal in India. However official statements have indicated an increasing regulatory disapproval of bitcoin and other cryptocurrencies. The Income Tax department sent out 4-5 lakh notices to bitcoin traders and investors in December 2017 asking for the source of their investments and whether tax has been paid on profits from cryptocurrencies. Some exchanges have also approached the Authority for Advance Rulings for clarity on whether GST is applicable to bitcoin.
Different countries have taken varied stances towards cryptocurrencies with the USA, Japan and Europe permitting cryptocurrency transactions and others such as South Korea and China taking successive steps to curb them. You can read more about this here. Average prices from Unocoin indicate that bitcoin trades in India at about Rs 8,20,656 which is at a 10% premium to its international price at $11609 (Rs 7,41,989) at the time of writing.