How Crypto Confusion in India’s Banking Sector is Affecting Indian Investors

The Indian cryptocurrency space is facing new challenges amidst the growing uncertainty over the approach to cryptocurrency trading in the country. In recent weeks, there has been a growing list of contradictory statements and policy implementation from the country’s regulatory bodies and its commercial banks.

The dichotomy has created an environment of confusion among cryptocurrency exchanges and investors in the country alike. Many have been thrown into a rush of anxiety that has left them at a crossroads. How will this trend affect them? Should they be concerned or not? How will they continue to buy and sell bitcoin and other crypto-assets?

India’s 2018 crypto ban

In 2018 the Reserve Bank of India (RBI) prohibited all regulated entities in the country from providing services to any individual or business dealing in digital currencies. The RBI cited concerns related to consumer protection, market integrity, and money laundering as the reasons behind its decision. The ban elicited a negative reaction across the country’s burgeoning crypto sector. Commercial banks and payment gateways stopped providing services and facilitating crypto-related transactions for individuals and exchanges dealing in digital assets in the country.

As a result, interest in cryptocurrency plummeted, investors found it difficult to buy bitcoin in India, and the number of people trading cryptocurrency reduced drastically. Virtual currency (VC) exchanges were dealt a massive blow. Firstly, they missed out on the global funding of blockchain startups as the ban reduced investors’ and venture capitals’ confidence in funding and investing in fintech innovations in India. Lastly, many of the exchanges were forced to shut down as most could not sustain their already established businesses.

Landmark crypto judgment in India’s supreme court

The RBI ban triggered a series of lengthy legal battles as concerned individuals and organizations sought to challenge the bank’s decision at the supreme court. In March 2020, the Supreme Court of India set aside the RBI’s banking ban on cryptocurrency in the country.

Since the relaxation of regulations, India has seen a resurgence of crypto adoption and a significant increase in the number of crypto adopters and startups has been recorded. For example, the number of active crypto users and blockchain startups in the country jumped from 8 million and 100+ in 2018 to 15 million and 300+ in 2021. The sector also witnessed increased attention and funding from international investors such as Tiger Global, Coinbase, Draper Associates, Binance, and many more. VC startups like CoinSwitch Kuber, WazirX and others got significant investments from international investors.

Crypto confusion in India

Despite a renewed sense of optimism brought about by the court’s ruling and the increased investment from global funding partners around the world, uncertainty and confusion have returned to India’s crypto space.

Over the last few weeks, reports suggest that some leading commercial banks in the country have again severed ties with crypto exchanges and halted the processing of crypto-related transactions. Investors and VC exchanges allege some commercial banks have denied them access to banking operations – citing the RBI’s crypto circular of 2018. This is despite the supreme court already having struck down the RBI’s crypto ban stating it was unconstitutional.

Recently, the National Payments Corporation of India (NPCI), which is the body that regulates retail payments in the country, stated that it won’t be blocking fund movements for crypto trades in the country. Rather, it said it has left the decision to each bank’s risk and compliance team to decide.

The NPCI assertion is significant because some banks have started shutting off banking services to merchants dealing with cryptocurrency – and have instructed their payment gateway operators to follow suit. If the NPCI had decided to disable UPI, net banking, and cards for investing in cryptos, then it would have applied to all banks in the country uniformly.

However, this has not been the case. There has been no formal ban on cryptocurrency in India and there has been no legal rule against crypto trading and investment in the country. Therefore, the decision of some banks to continue to deprive investors and exchanges of access to banking services is confusing, to say the least.

How has this affected investors in Indian?

The decision to deny banking services has been felt hard throughout India’s crypto sector. Firstly, the decision to abruptly stop facilitating crypto-related transactions by the banks and payment gateways operators has left investors and exchanges with fewer payment options. For example, customers of banks which have disabled crypto transactions cannot use facilities like UPI, net banking, or cards to buy bitcoin in India.

In a market as volatile as the crypto market, investors looking to move funds quickly from their bank accounts to their crypto wallet and vice-versa, either to take advantage of a price swing or to reduce the impact of loss, will find it difficult to achieve. Also, local companies who have re-launched their activities and are just finding their feet will be struck by this. Research shows about 15 million Indians are wondering how to buy bitcoin in India. The majority of the unbanked Indians who have resorted to crypto for making payments have been left exposed by these actions and are also finding it difficult to buy bitcoin in India.

International investors and venture capital funds will further be put off by what is perceived as unfavourable regulatory policies. This will only lead to Indian startups missing out on more investment opportunities.

What are the solutions?

Amidst all the ruckus and dichotomy over cryptocurrency, investors might be concerned about how to buy cryptocurrency in India. It is not all gloom as there are still interesting and easier solutions available in the market.

One such solution is Remitano, a global crypto exchange and P2P platform. Remitano provides an easy and safe alternative for investors to buy bitcoin in India. On Remitano, users can exchange bitcoin quickly and securely, trade with other users on the P2P platform, swap crypto assets with the Swap feature and invest in cryptocurrency through Remitano Invest.

Remitano platforms also include two wallet types – Crypto Wallet and Fiat Wallet — attached to each Remitano account. Users can safely store their crypto assets in their Remitano INR wallet with confidence. The Fiat wallet supports deposits of fiat currency into the Remitano account. Although all Indian exchanges no longer have automated banking, due to regulations everyone had to stop. But at Remitano, our fiat wallet still works.

How to Buy Bitcoin on Remitano

• Visit www.remitano.com and click on register at the top right corner to create an account. Register with one of the options provided. Make sure you read and understand the terms and conditions before proceeding with the registration.
• Once your account has been successfully created, head to the KYC/AML section to complete the process (it is mandatory). Provide the required info to complete the KYC/AML verification. You can rest assured your data is safe, secure, and encrypted with Remitano.
• Deposit fiat into your Remitano INR wallet through the multiple options available on the platform.
• Once your account is funded, head to the “Wallet” section on your dashboard, where you will be able to buy bitcoin.
• Purchased bitcoin can be safely stored on your Remitano INR wallet.

Editorial Note: This is a sponsored article. Opinions expressed are solely those of the sponsor and readers should conduct their own due diligence before taking any action based on information presented in this article.