After top private banks like ICICI, Yes Bank stopped providing services to exchanges dealing in cryptocurrency, this time it is Paytm Payments Bank which has stopped facilitating services to Crypto Exchanges from Thursday 10 PM May 20th.
In the news, it has been highlighted that API services have been disabled which is a crucial part of facilitating real-time transactions for customers. What happens after this, well the Exchanges have to look out for a new banking partner as the users of these exchanges won’t be able to deposit INR directly via bank transfer.
A report from Reuters stated that RBI has issued a private notice to all Indian Banks to reconsider their transactions related to cryptocurrency in the country.
This isn’t uncommon that Paytm Payments Bank has stopped offering its services to Indian Exchanges at a time when top private banks are busy suspending retail customer accounts which have dealt with cryptocurrency transactions at some point. ICICI bank withheld providing its banking services recently and the customers were hit with a time period in between where the exchanges were trying to find a reliable new banking partner.
Similar action has been taken this time as well by companies like WazirX, CoinDCX, CoinSwitchKuber, etc. As of now, customers can deposit INR by a wallet application called as MobiKwik but that comes at a cost of 1.5% per transaction plus GST for the end-users.
According to Nischal Shetty, founder, and CEO of WazirX, several payment gateways have severed ties with Indian cryptocurrency exchanges over the past couple of weeks after ICICI Bank refused to allow such transactions. But in the current situation, none of the exchanges have been able to offer deposit services to the customers since Thursday at 10PM after Paytm Payment Bank refused to operate with Crypto Exchanges.
As the global user base of cryptocurrencies and crypto-assets has surpassed 200 Mn, the Indian crypto industry has also registered a record jump in the number of blockchain-based currency adopters. The number of active users is currently approximately 15 Mn, while the number of blockchain startups in this space has gone up from 100+ in 2018 to 300+ in 2021.
One more thing to be noted here is that the volatile nature of crypto is very dangerous for new retail investors who come in the hopes of making a quick buck with their money. If that is allowed to keep happening in the country, people will surely find themselves in a difficult financial position as the industry is still unregulated and a lot of exit scams and rug-pulls keep happening in the sector.
While I’m writing this article, the market is going through a bearish sentiment and most coins are down about 50% or more from their all-time-high prices earlier this year. Some people will surely find themselves in deep losses as this correction happens. The volatile nature of this unregulated market is probably the thing that attracts new immature investors.
It is time that will tell whether India frames a proper regulatory bill for this market to prevent this type of problem from happening so that genuine crypto startups can benefit from this huge global market.