Another Indian Crypto Exchange Shuts Down Blaming Banking Ban

Regulatory uncertainty ushered in by India's central bank appears to have brought about the demise of another cryptocurrency exchange in the nation.

In a Medium post published Thursday, the Koinex exchange says it's been forced to shutter its services as a de facto ban on banking relationships for crypto firms - ordered by the Reserve Bank of India in April 2018 - has meant that it is economically unfeasible to continue with normal business.

"We have consistently been facing denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets. Even for non-crypto transactions like payment of salary, rent and purchase of equipment, our team members, service providers and vendors have had to answer questions from their respective banks - just because of an association with a digital assets exchange operator."

While the RBI banking ban is being challenged in the Supreme Court, a lack of clear direction from the government has meant that the case is currently in limbo until a decision is made.

Last September, India's then-largest crypto exchange by trading volume, Zebpay, was also forced to shut down citing the RBI restrictions.

A government panel has reportedly been meeting to try and decide a path forward for crypto regulation in India with total prohibition being possibly on the table.

Koinex further said that a news report about proposed Indian legislation called the 'Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019' has created nervousness among customers and caused trading to further drop off.

The article "Has created enough FUD in the Indian crypto trading community to result into a sharp decline in trading volumes and [instill] a clear discomfort for all the law-abiding citizens of this great nation."

As a result of the difficulties, the exchange permanently ceased trading services at 2.00 p.m. local time Thursday, June 27.

"A snapshot of the wallet balances at this time will be taken for record, and the effort to disburse balances will begin immediately. Since the bank accounts with user funds are still frozen and the capital is held up, we have made arrangements for funds from our own resources, so that we return as much as we possibly can, back to our users and alleviate their position in reference to the funds held up in these frozen accounts."