It has been about two months since the crypto banking ban by the Reserve Bank of India (RBI) went into effect. Sathvik Vishwanath, CEO and co-founder of Indian exchange Unocoin, to discuss the aftermath of the central bank’s ban.
All Eyes on Supreme Court
The RBI issued a circular on April 6 banningall financial institutions under its control from providing services to crypto businesses. The central bank gave banks three months to exit any existing relationships with companies dealing with cryptocurrencies. A number of industry participants have filed petitions with the country’s supreme court against the ban. The court is set to hear them all on September 11.
Sathvik Vishwanath, CEO and co-founder of Unocoin, one of India’s largest cryptocurrency exchanges, told news.Bitcoin.com that after the RBI ban:
The volumes have significantly come down as this is not only restricting the new users joining the platform but it is also hurting the sentiments of the present users. Now everyone in this space is waiting for the apex court comments on Sept 11th.
His Bangalore-based exchange is still growing, albeit at a slower rate than previously. Currently, “We have about 20,000 users coming in on a monthly basis. In the good months, we have seen this kind of number every 3 days,” he shared.
Regulation is the Biggest Challenge
The Indian government has been drafting crypto regulation. According to Subhash Chandra Garg, Secretary in the Department of Economic Affairs, the draft was supposed to be ready in July. However, it has reportedly been delayed until the year’s end.
The central bank has also reportedly set up a new unit for cryptocurrencies, blockchains and artificial intelligence.
Meanwhile, the Securities and Exchange Board of India (SEBI) sent officials to Japan, the UK, and Switzerland last fiscal year to study cryptocurrency and initial coin offerings from each of the three countries’ financial regulators.
Regulation has been the biggest challenge followed by sentiments of users. However, the price surge may positively influence the sentiments but the regulation can continue to be a challenge for the time being.
The Popularity of P2P and Crypto-to-Crypto Trading
Since the ban, some local crypto exchanges have come up with their solutions for INR withdrawals. The most popular method to bypass the central bank’s ban is by exchange-escrowed P2P services. News.Bitcoin.com has reported on the rise in popularity of P2P trading in India several times.
Even the RBI anticipates the shift from trading on regular exchanges to P2P trading. “Developments on this front need to be monitored as some trading may shift from exchanges to peer-to-peer mode, which may also involve increased usage of cash,” the central bank wrote.
As for Unocoin’s likelihood of adding their own P2P solution, Vishwanath revealed that “presently, we do not plan to but we are evaluating.” In May, the exchange launched a crypto-to-crypto platform called Unodax, which now offers 41 trading pairs in multiple base coins. However, he described:
India’s biggest crypto population is not ready for the crypto-to-crypto trading. There is a bigger percentage of users who just buy bitcoin as an investment than trying to earn money through short-term trading.
Meanwhile, another major Indian exchange, Zebpay, announced on September 4 that it will return all users’ Indian rupees on deposit at the exchange. Citing the RBI ban, the exchange wrote, “We have been distressed at the raw deal crypto-traders are getting in India as a result of the banking problems.” Zebpay will begin the refund process on September 5. “While it is not possible for us to speak on behalf of our banks, we intend to return your money to you as soon as possible,” the exchange reiterated.