Zebpay shuts down fiat services as India’s crypto ban looms

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Indian cryptocurrency exchange Zebpay has halted deposits and withdrawals in Indian rupees, ahead of the pending central bank ban on cryptocurrency businesses that came into force on Thursday.

One of the biggest exchanges in the country, Zebpay gave prior warning to its customers citing events “beyond its control” relating to the ruling by the Reserve Bank of India (RBI). India’s de facto central bank’s ban on cryptocurrency businesses prompted Zebpay to inform its customers of the potential for a stop in normal service, which it intimated could last for an indefinite period.

In an update on its website, Zebpay was unable to confirm to its customers when the decision would be reversed, and when it would begin accepting deposits and paying withdrawals in fiat currency. According to the exchange, “INR deposits and withdrawals have been paused in the Zebpay app until banks allow us again.”

“As per a recent RBI action, banks have been told to discontinue banking services to those dealing with virtual currencies. While our industry is challenging this legally, the outcome is beyond our control,” Zebpay stated.”Hence, if you are holding any rupees, or depositing any rupees in Zebpay, there could soon come a time when we may be not be able to honor withdrawal requests. Please continue only if you understand this risk.”

The decision follows a ruling of the Indian Supreme Court over the deadline imposed for the ban, where the courts failed to support an extension on the timeline to allow cryptocurrency businesses to better prepare for the withdrawal of banking support.While the Supreme Court is due to hear a petition arguing against the ban on July 20, the deadline set for July 5 remains in force for now, as a result of their ruling.

The RBI’s plan was first suggested back in April, and has proved widely controversial. A number of cryptocurrency businesses have been impacted by the decision, with some like WazirX switching their business model from being a pure exchange to becoming a peer-to-peer platform to avoid the need for fiat conversion.

WazirX CEO Nischal Shetty said that following the ruling, their only option was to shift their focus away from direct banking. In an interview with the Economic Times, Shetty said, “If banking is something the exchanges are not allowed to do, then the solution is something that direct banking doesn’t come in.”