India’s negative stance on virtual coins has compelled the crypto exchanges to look for crypto-havens.
Recently after Reserve Bank of India (RBI) issued a mandate that, by July 6, exchanges must close the bank accounts of firms dealing in cryptocurrencies. Other private and public banks are also forbidden from providing loans or services post-deadline. Basically, this marks the end of the journey for the digital-currency operations in India.
However, the exchanges have not lost hope and are looking for options elsewhere.
“It won’t be possible for us to function in the current regulatory environment with existing business models. Therefore, several firms are looking at registering their head offices out of India,” said Shubham Yadav, co-founder of Coindelta, a cryptocurrency exchange.
These “cryptocurrency-friendly” locations include Singapore, Switzerland, Estonia, Malta, Japan, Dubai, and the Cayman Islands. “This way, we won’t be an India-centric exchange but will become a global player,” the CEO of another virtual exchange company said, declining to divulge the firm’s plans.
The exchanges are also seeking legal help to challenge RBIs decision and their lawyers believe there will are several loopholes in RBIs decision which can be challenged in the court.
“The current remittance regulations will not allow customers to convert rupees into any other currency and make purchases from an international exchange. Therefore, the only option left will be a crypto-to-crypto trade for (the existing) investors that allows you to buy one cryptocurrency in exchange for the other,” said Hesham Rehman, CEO of Bitxoxo, another cryptocurrency exchange. “The other option is buying by paying cash in another nation, which may not be feasible.”
For the first-time investors, only peer-to-peer transaction facility seems to be viable, wherein the exchange’s role will be limited to connecting the buyer and seller offline, such that the firm does not come in the picture.
Trust is the most important factor while implementing this method.
“Trust is an important concern here as these transactions take place between two individuals. It works on the guarantee that you will get the cryptocurrency after giving cash. So there are concerns about frauds or illegal transactions,” explained Nischal Shetty, founder, and CEO of WazirX, another Indian cryptocurrency exchange.
In such cases, only the big exchanges with decent value in the market will sell and flourish. For any budding exchanges, it will be a tough road ahead to survive.
Image via Shutterstock