Yet another Indian crypto exchange shuts down amid banking ban

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Another major cryptocurrency exchange in India is to shut down, citing concerns over the de facto crypto banking ban brought in by the country’s reserve bank.

Koinex, which described itself as “India’s most advanced digital assets exchange,” is bowing out over the regulatory uncertainty around the Reserve Bank of India’s (RBI) policy, which effectively makes it more difficult for crypto businesses to operate in the country.

However, the RBI’s banking ban is currently subject to an ongoing challenge through the courts, casting further uncertainty over the regulatory landscape for operators in the country.

INR Announcement:
After trading of digital assets closes at 2:00 PM IST on Thursday, 27th June 2019, we will begin remitting your INR balances to your bank accounts registered with Koinex. Read more: https://t.co/ULBQXTsd71

— Koinex (@koinexindia) June 27, 2019

In a post published to its Medium account, Koinex said the ban on banking relationships for crypto businesses had made it no longer viable to continue trading:

“We have consistently been facing 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.“

As of 2 p.m. local time on June 27, the exchange has ceased trading, with a pledge to reinstate affected customers as quickly as possible.

“A snapshot of the wallet balances at this time will be taken for record, and the effort to disburse [Indian rupee] balances will begin immediately. Since the bank accounts with user funds are still frozen and the capital is held up, we have made arrangements for funds from our own resources, so that we return as much as we possibly can, back to our users and alleviate their position in reference to the funds held up in these frozen accounts,” Koinex said.

The exchange also argued that the RBI’s measures have had a negative impact on overall trading volumes, by creating an atmosphere of fear around crypto dealings in India.

While it’s clear the RBI itself has no intention of rolling back on the blanket ban, there is still hope the courts will side with the crypto sector in striking down the banking policy.

For the time being at least, the news means crypto users in India are left with an even more limited choice as to how best to buy and sell cryptocurrency.