As traditional banks and prominent payment gateways continue to be wary of allowing cryptocurrency transactions, some digital payments players such as MobiKwik and Airpay have stepped into this space.

Currently, these are the only two payment processors or gateways serving the cryptocurrency exchanges, said Gaurav Dahake, founder and CEO, Bitbns. Relatively lesser known Airpay was co-founded by Amit Kapoor, Kunal Jhunjhunwala and Rohan Deshpande in 2012. Jhunjhunwala comes from the family of ace stock market investor Rakesh Jhunjhunwala. Rakesh Jhunjhunwala and his brother Rajesh Jhunjhunwala are also investors in the firm along with Kalaari Capital. Bitbns has created its own gateway solution which helps its customers deposit money through UPI and other modes for free. He added, “MobiKwik is launching its IPO this year. A large chunk of its revenue is going to come from cryptocurrency exchanges, as it is the only one that is serving the industry right now. MobiKwik has made a significant amount of money through cryptocurrency clients in the last few months.” An email sent to MobiKwik didn’t elicit any response.

Also read: Indian crypto exchanges flounder as banks cut ties after RBI frown

Last month the Reserve Bank of India had issued a statement clarifying that banks cannot cite 2018 order for not working with cryptocurrency startups. The banks were cautioned also to participate at their own risk ensuring diligence.

Banks are wary

Over a month on, there hasn’t been any change in the banks’ official stance on catering to the crypto exchanges, while they are yet to give access to payment processors or gateways to work with them.

“We were hoping that things would improve post clarification from RBI. Although things haven’t got bad, nothing has improved either with banks like ICICI Bank, Yes Bank and Paytm. They are still reluctant to work with cryptocurrency exchanges and other banks are not very positive either. We were hoping for clarification soon after RBI’s statement, but the talks are on as of now,” Avinash Shekhar, Co-CEO, ZebPay told BusinessLine.

Nischal Shetty, CEO, WazirX, though, believes that the RBI circular at least clarifies that the banks can work with the exchanges. WazirX being one of the largest players in the space has been following the conversations closely. “The business teams of banks are open to it because crypto industry is rapidly growing, but the compliance teams are still trying to put their thoughts together. At present, no bank has come forward to service the exchanges, but hopefully, they will soon,” he said.

“Banks don’t want to miss out the opportunity. They want to be seen as someone supporting this but because we don’t have a very clear legal framework for it in India, banks are being cautious and asking for a few more documents, discussing facilities and limits,” Ramalingam Subramanian, CMO, CoinDCX said.

The process and challenges

In absence of banking partners and payment gateways, WazirX has moved to peer-to-peer (P2P) trading transaction mode. Through P2P way, buyers and sellers of crypto on the exchange transfer money directly into each other’s bank account on trading a cryptocurrency, unlike earlier, when the money would first go into WazirX’s account and then get credited from there.

Others are still relying on the payment processor, doing a lot of the back-end clearance work of transactions manually themselves, as they don’t have access to automated API banking as of now. This leaves customers with limited options to do active trading and transacting when the cryptocurrency values are falling sharply. “Though smaller amount transactions can be done through UPI, but there is a daily limit to that. Customers are missing out on opportunities as larger transactions are restricted. New entrepreneurs don’t want to get into direct cryptocurrency startups right now and even if they do, they are setting up businesses abroad,” Shetty said.