Indian crypto exchange warns customers that Rupee withdrawals may become “impossible”

Zebpay tweets customers to warn them not to rely on legal appeals to Indian bank ban on dealing with cryptocurrency companies.

Back in April we reported on stringent new laws being bought in by Indian authorities, banning any banks in the country offering their services to companies involved in cryptocurrency – be they ICOs, exchanges or wallets. As the July 5th deadline (three months after the edict) set for banks regulated by the Reserve Bank of India to cease dealing with such services, exchange and wallet service Zebpay has issued a warning to its customers that Rupee withdrawals be disrupted stop very soon.

As the warning says, if  bank begin to make moves to conform to the new RBI directive in the next few weeks, it could effectively stall rupee trading pairs, or possibly “cause significant price movements.”

Pointing out that its accounts are currently still active, Zebpay promises to “endeavour to return your rupee balance to your bank account as soon as possible, so long as our banks support such withdrawal.”

According to CCN, Zebpay intends to continue crypto-INR pair trading after any bank account freeze to allow its customers to buy crypto with any frozen deposits – though it added it can’t guarantee that such arrangements are sustainable “forever” and that, eventually, rupee fiat deposits left in its system could become useless.

Worryingly, with the proposed deadline so close, it says it’s currently unable to “fathom all the consequences” of the upcoming shutdown.

News of the announcement cannot have helped a turbulent weekend for Bitcoin, which sunk to its 2018 low against the dollar. It traded even lower against the rupee – dipping down to reported level of ₹350,782, ($5,150), before recovering somewhat.

The proposed new restrictions – apparently proposed arbitrarily by the government without external expert or sector input – came following comments from India’s finance minister, Arun Jaitley, where he confirmed the country “does not consider [existing] cryptocurrencies as legal tender or coin, and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities.”

His comments did not, in and of themselves, imply that Indian citizens could not hold cryptocurrency assets, nor that exchanges for such currencies were acting illegally. However, the RBI is working towards  making the practical use and trading of cryptocurrency much more difficult and marginal within India.

Something like 1 in 10 worldwide Bitcoin transactions have taken place in India over recent months, despite repeated warnings from authorities to the public that they should exercise caution when dealing with it and other crypto.

Alongside the April 5th edict, came these comments by the RBI:

“Virtual Currencies, also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others… In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs.”

Reports of further measures to tax cryptocurrency in India emerged in late May. This followed unsurprising reports that many crypto exchanges – including Zebpay – are looking to leave the country in order to dodge harsher regulation.