India's Biggest Bitcoin Exchanges View Frozen Bank Accounts - Report

 India's Biggest Bitcoin Exchanges View Frozen Bank Accounts - Report

According to a report from the Indian news publication, The Economic Times (ET), Bitcoin exchanges in India could face disruptions from the country's major financial institutions. In the last month since December 2017, several domestic banks, including the State Bank of India, HDFC Bank, Axis Bank, Yes Bank and ICICI Bank, have frozen accounts belonging to select digital currency exchanges.

The suspension of bank accounts seems to be mainly motivated by the lack of banking industry of faith in these companies, especially since most of the exchanges were largely run on borrowed funds. In addition, Indian banks that have not imposed a full suspension on bank accounts, most have limited the amount of money that can be withdrawn in a single day.

Although the list of economic times affected companies only includes Zebpay, Unocoin, CoinSecure and BtcxIndia, other exchanges have also been publicly experiencing some problems.

A representative of the bank told ET that "(The) Reserve Bank of India has not issued a directive for us - it is a warning movement on our part. Financial institutions also require cryptocurrency swaps of collateral on their loans while keeping hostage accounts. A source close to the file said,

   "Since last month, banks have asked for additional guarantees with 1: 1."

Most Indian exchanges that borrowed capital from financial institutions have done so in the hope of raising an equivalent amount of private equity investments, something that has come not yet accomplished. It is likely that investors are waiting for the government to clarify the tax and regulatory aspects of cryptocurrencies in the country.

It is estimated that eight bank accounts have been frozen so far, with more than possibly following up, according to sources cited by The Economic Times. Banks also reported trading using their bank accounts for reasons other than what was said at the time of their creation. Financial institutions in India are mandated to disclose such suspicious transactions to the FIU.

It is not only the banking sector in India, which closely studies the exchanges, however. the country's direct and indirect tax services have also begun to show a keen interest in this area. In December 2017, the Indian Income Tax Department conducted audits on a number of cryptocurrency exchanges across the country. A few days later, he announced that he had sent notices to wealthy individuals that previously traded large amounts of cryptocurrency. According to the same department, the cumulative turnover of the 10 Indian exchanges is in the order of magnitude of $ 6 billion.

Zebpay and Koinex, responsible for most of India's digital currency trading volume and the most popular options among new investors, have both published several statements after the suspension of some of their bank accounts in recent weeks . While Zebpay did not stop processing withdrawals in that time frame, he had some snags with deposits as evidenced by a support web page. Koinex suspended all fiduciary transactions, including deposits, for about a week before reactivating the option on January 8, 2018.

Because of this increased scrutiny by lawmakers and financial organizations, last month was particularly troublesome for Indian trade. The situation is likely to deteriorate as the market continues to intrigue the country's population with cryptocurrency and gain ground among investors for the first time.

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