Indian Banks Force Customers to Promise Not to Use Bitcoin

Following new regulatory measures from the Reserve Bank of India prohibiting banks from providing services to cryptocurrency businesses, some Indian banks are taking drastic measures to discourage cryptocurrency adoption, reportedly requiring customers to sign contracts stating that they will not use cryptocurrencies of any kind as part of their new terms of service agreement.

Line in The Sand

The new measures effectively force customers to choose between banks and crypto, perhaps a difficult decision for many supporters of the fledgling cryptocurrency movement. While many hope to see cryptocurrency overtake traditional banking entirely, the infrastructure to do that simply isn’t there at the moment, and actions such as these carried out by banks on a large scale only make it more difficult to foster adoption – which, of course, is likely the point.

@DesiCryptoHodlr or “Indian Crypto Girl” on Twitter posted an image of the terms and conditions required by Kotak Mahindra Bank as an example of the new, strict measures being taken against cryptocurrency users.

Image courtesy: @DesiCryptoHodlr

The bank asks users to declare that they “will not deal with any transactions related to Crypto-currency including Bitcoins,” adding that the Bank reserves the right to close their account if they should breach the agreement.

Similar warnings are displayed on the bank’s ATM screens:

Virtual currencies (VCs) are not legal tender and do not have any regulatory permission or protection in India. We request you not to make transactions involving any VCs from any of your account/s. For any such transactions, the bank shall be acting in accordance with the regulatory guidelines which include closing your account without further intimation.

The bank claims to be acting in accordance with IRB regulations, and Crypto Girl stated on Twitter that this is just one of many banks forcing their customers to swear off crypto if they want banking services. Another Twitter user @IAmCryptoLegend commented in the thread to say that that banks are implementing similar measures in neighboring Pakistan.

This was confirmed by a screenshot of a text message from Faysal Bank warning customers not to use cryptocurrencies:

IRB Vs Crypto

The Indian central bank has taken a stand against cryptocurrency, citing issues of security and volatility. The bank’s governor Raghuram Rajan does concede that bitcoin is “fascinating” to him, and states his belief that India and perhaps humanity, in general, will move towards a cashless society in time.

For us at the Reserve Bank, this may happen in 10 to 20 years from now. [I] think these virtual currencies will certainly get much better, much safer and over time will be the form of transaction, and that’s for sure.

While the IRB has not banned cryptocurrency outright and Indian citizens are still legally free to use cryptocurrencies if they wish, the growing trend of banks refusing services to crypto-users could put many citizens in a tight spot, forcing them to choose between the underdeveloped system of the future and the outdated system of the past.

Author: Conor Maloney
Image Credit

Major Indian Crypto Exchange Shutting Down

Zebpay, one of India’s largest cryptocurrency exchanges, is closing down amidst the country’s tight reins on exchanges and banks that work with them.

The exchange writes in a blog post that, “The curb on bank accounts has crippled our, and our customers’, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.”

The Reserve Bank of India (RBI) has fought a war against cryptocurrencies for years, culminating with forbidding regulated financial institutions from dealing with cryptocurrencies. At the time, all institutions were given three months to cease such operations. After those three months, in July, India’s top court refused to overturn that ban, stating that the central bank is trying to “cut off an avenue for crimes using cryptocurrencies.”

This has led cryptocurrency exchanges to various struggles. Some exchanges have attempted to circumvent the banking ban by introducing peer-to-peer trading, where the exchange merely functions as an escrow service for direct transactions between users.
Zebpay had stopped all fiat deposits and withdrawals at the exchange a day before the banking freeze, which happened on July 5th, 2018. However, they could not keep up. “Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain. However, the recent past has been extremely difficult,” the blog post explains.
Zebpay struck half a million downloads on the Android smartphone platform in mid-2017 and quickly doubled to hit a million app downloads during 2017’s bull run in October. It now has 3 million users using its iOS and Android apps, with support for 20 cryptocurrencies and 22 trading pairs, according to its website.

However, another major Indian cryptocurrency exchange was quick to reply to Zebpay’s announcement: Koinex took to Twitter to reply to Zebpay’s tweet with an image that says, “In case of emergency, break glass,” sporting the Koinex logo.
Some marketing opportunities are too good to let them pass you by I guess!

Author: Sead Fadilpašić
Image Credit: iStock/1970s