The Reserve Bank of India (RBI) in an April circular barred Indian banks from dealing with crypto-currency exchanges. But they are finding ways around it, such as converting to crypto-to-crypto trading platforms, or shifting base overseas to escape regulatory crackdown.
According to a crypto-currency trading platform founder, as of now, there is an effective ban on fiat (Indian currency) to crypto trading. But, there is no harm in peer-to-peer trading, or exchanging one crypto currency against another.
The RBI, through its notice titled ‘Prohibition on dealing in Virtual Currencies’, mandated banks, e-wallets and payment gateway providers to withdraw support to crypto-currency exchanges and other businesses dealing with VCs in India. A period of three months (from April 6) was granted.
Zebpay and Kionex, for example, have crypto-to-crypto trading platforms.
While Zebpay has one pair of cryptos, Koionex has 23-odd pairs.
Unocoin, on the other hand, has launched UNODAX, a multi-crypto asset exchange. Sathvik Vishwanath, co-founder & CEO at Unocoin, was unavailable for comments.
BuyUcoin, established in 2016 as a crypto-currency exchange and wallet company, has announced the launch of its own token, BuyUcoin Token (BUC).
According to Shivam Thakral, co-founder and CEO, BuyUcoin Token is expected to be established with a total supply of 100-million tokens. BuyUcoin, for instance, offers the facility to exchange over 31 different crypto-currencies, including Bitcoin, Ripple, Litecoin, Ethereum, NEO, Dash, OmiseGo, Steem, among others.
“We will be charging a commission on crypto-to-crypto trade. Decentralised exchanges will take this industry forward,” he told BusinessLine.
Relocating base
In fact, BuyUCoin, according to Thakral, is shifting its base to Singapore. “It is a Singapore-based company that will operate the crypto-to-crypto exchange and the token. So it is not going to be under the purview of Indian laws,” he said.
He is not alone. Vishal Gupta’s Binex.trade – a crypto-currency exchange – too is registered out of Singapore. And within the next three to four months, they would be shifting base to Estonia.
There are others too like IDAP who have shifted base, sources say.
Several crypto-currency exchanges also have also challenged the RBI circular in the Supreme Court, the hearing for which is due on July 20.
According to Gupta of Binex.trade, crypto-exchanges have a two-pronged approach, which includes filing a petition in the Supreme Court to get a stay, or shifting businesses overseas so they can continue as crypto-to-crypto trading platform.
As Avimukt Dar, Partner, IndusLaw puts it, crypto-currecny exchanges are planning to file for an early hearing before the Supreme Court regarding the matter.
“The parties appear to have found out through an RTI that the RBI may not have formed a committee and perhaps acted without detailed reasoning. They are likely to file for an early hearing before the Supreme Court in order to get a stay before the RBI circular comes into effect, unless the RBI agrees to extend the deadline,” he said.