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Indian Exchange Shocked By Banks

BTCXIndia’s recent closure has ruffled some feathers in the Bitcoin Community. Despite the live trading platform’s attempt to work within within a regulated framework their bank account has been discontinued, forcing BTCXIndia to close their doors.

Launched in May 2014, BTCXIndia was to bring education and easy of trading to Indian Nationals. Within mere months of operation the platform was reportedly the first exchange in India able to provide a real time trading. By July 2014 the company was recognised as having the largest trading volume of bitcoin in India.

Due to a lack of resources regarding the regulation of bitcoin and other virtual currencies, BTCXIndia decided on a self-regulating approach with consideration that know-your-customer (KYC) and anti-money-laundering (AML) would soon arrive. “We have been in close contact with banks and authorities to ensure we are as legally compliant as possible in a new industry” stated BTCXIndia.

“They will no longer serve bitcoin businesses. We have investigated the possibility through other banks, but it seems this is a general policy in India as of today.”
— – BTCXIndia

The Government of India has been consistently cautious regarding Bitcoin. Apprehension from the Reserve Bank of India’s Assistant Manager Ajit Prasad can be seen in a statement released in Dec, 2014. “The Reserve Bank of India has today cautioned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.”

At the time of the statement the Reserve Bank of India (RBI) had been researching developments relating to crypto currency.  The RBI expressed concerns that bitcoin operates without a central bank, or monetary authority, and that users are exposed to a range of risks.

“There have been several media reports of the usage of VC’s [Virtual Currencies], including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.”
— – Reserve Bank of India

Following this statement the Indian Directorate General of Economic Enforcement, a law enforcement agency and economic intelligence agency, raided the premises of buysellbit.co.in and rbi.rbit.co.in. On the second day of the raids the Enforcement Directorate released a statement advising, “We are tracking the people who availed these services and from whom they availed these services,”

“If the transactions have taken place across the countries, it will come under the purview of Foreign Exchange Management Act (FEMA), while if it has taken place within the country, it will come under the lens of the Prevention of Money Laundering Act (PMLA).”
— – Enforcement Directorate

There has been much discussion since these events as to what Bitcoin and other virtual currencies should be considered as. Although Bitcoin is not considered illegal in India, there is a lack of existing legal and regulatory clarification on the topic. The definition of what virtual currencies are, and how they should be treated in a court of law, is under constant scrutiny. BTCXIndia states that once the regulatory situation is clear in India, they will begin trading once again.


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