Crypto Crackdown: Exchanges In India Look To Shift Base Overseas

News, Regulation | April 9, 2018 By:

Crypto exchanges in India are reportedly looking to move their head offices to foreign shores days after the country’s central bank barred banks from dealing in cryptocurrency.

Last week, the Reserve Bank of India ordered banks to refrain from providing any services to individuals or business entities dealing with or settling cryptocurrencies. It has given regulated entities three months to unwind their business relationships with crypto-related companies.

The order has led Indian banks to issue notices stating that the use of their credit/debit cards and cross-border remittances for purchase/trade of cryptocurrencies such as bitcoin is not permitted.

As a result, local crypto exchanges such as Zebpay, Unocoin, CoinSecure, BuyUcoin and BTCX India are now reportedly exploring to shift base to countries, which are supportive to their businesses. Singapore, US, Dubai, and Belarus are among the countries where they plan to shift their bases. The exchanges are reportedly looking to settle the accounts of their existing customers before they shut down operations in the country.

BuyUcoin CEO Shivam Thakral said they have to move their company to some foreign country where regulations allow opening of bank accounts. He said it will become a global operation rather than an India-centric business.

“We have two-three options in our mind, like Singapore, US and one more,” Thakral said. “This plan would be set into motion in the worst-case scenario of the government asking cryptocurrency exchanges to shut operations in India. Then, we could just take our company abroad with a crypto-to-crypto trading model. In India, it is fiat-to-cryptocurrency trading right now.”

Unocoin founder and CEO Sathvik Vishwanath said that his company is also looking at ways to cope with any disruption that may occur due to adverse regulations.

“For the time being, we are trying different angles to survive, which we cannot disclose,” said Vishwanath. “We want the current ecosystem and cryptocurrency industry to survive, without abruptly changing our model, where there is no exit point. Over the next couple of weeks, we may have more clarity on how we should take this forward.”

Coinsecure chief operating officer Jincy Samuel said that industry stakeholders are holding talks with groups such as the Blockchain And Cryptocurrency Committee of India (BACC) and the Internet and Mobile Association of India (IAMAI) on the issue.

“We, along with the other industry players are in talks with IAMAI and BACC to see if they could help us in getting a hearing at the Supreme Court to see if stay orders are possible on the current decision of the RBI,” Samuel said. “This [RBI’s order] will impact all crypto exchanges across to the country, as that would leave users with no options to deposit/withdraw fiat from these platforms. The only way forward would mean that users will move to an alt – alt trading or the cash market.”