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© 2018 by Bitan Ghosh

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An engineer by profession and entrepreneur by choice. Currently pursuing his MBA from Indian Institute of Foreign Trade, Kolkata Campus. 

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One of India's Largest Cryptocurrency Exchange Shuts Shop

Ending last week, Zebpay decided to cancel all unexecuted crypto-to-crypto orders and credit user's coins/tokens back to its wallet.

Amid RBI ring-fencing attitude and Government’s silence on the legality of virtual currency (VC), earlier this week, one of the largest cryptocurrency exchanges in the country - Zebpay has closed its shops.  On the evening of 28th September 2018 post 4 PM, Zebpay decided to cancel all unexecuted crypto-to-crypto orders and credit user coins/tokens back to its wallet.

In a company statement, Zebpay said, “Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain. However, the recent past has been extremely difficult. The curb on bank accounts has crippled our and our customer’s ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.”

It is also said, Zebpay wallet will continue to work even after the exchange stops and customers can deposit and withdraw coins or tokens into their wallet.

The Backstory

Earlier this year in April 2018, while announcing the bi-monthly policy, RBI issued a diktat to its regulated entities asking them to stop having a business relationship with entities dealing with virtual currencies by the first week of July.

Soon after some of the crypto exchanges like BTCXIndia shut their businesses down, few of them along with IAMAI moved to the Supreme Court challenging RBI’s stance.

Earlier this month, reports quoted RBI based on the counter affidavit filed in response to Sidharth Dalmia and Dwaipayan Bhowmik’s petition saying that VC cannot be validated as a payment system since it is based on the peer to peer model and they are no service provider to facilitate it.

It also raised concerns, under the Foreign Exchange Management Act (FEMA) as it added to notify VCs as valid currency the requirement is that the instrument should possess identical or similar characteristics that of cheques, postal orders, money orders etc, which cryptos fail to address.

Meanwhile, according to SEBI’s annual report, the capital market regulator has sent officials to other countries understand the cryptocurrency and ICO market globally. Even RBI in its previous statements has agreed that regulator has taken a similar step to understand the VC market.

Overall, the Indian government and SEBI are yet to share the stance on the matter.

Option Two

While on the other side, certain cryptocurrency exchanges such as WaxirX and Koinex have tweaked their business models and have started promoting peer-to-peer exchange model.

However, what the future holds for the cryptocurrency exchanges in India – well one can only look up to the Supreme Court for another landmark judgement