In a country widely seen as extremely keen on blockchain technology and also optimistic that cryptocurrencies will affect some social improvement, two Indian trading platforms are due to close by March 5, 2018, due to regulatory hassles.
Tight Regulation Not Good for Business
In scenes reminiscent of the Chinese exodus after that regime banned ICOs and overall cryptocurrency speculation, India has surprised commentators by pressurizing two digital coin marketplaces into shutting their doors. Citing their businesses being “under a lot of stress,” both BTCXIndia and ETHEXIndia will close shop by Monday, March 5, 2018.
Saying that “Until new rules are in place for tokens on public blockchains, we are halting our trading platform.” Furthermore, the holding company of both exchanges, S Capital Solutions Pvt Ltd, is bowing out.
The move comes as a shock to the various private and parastatal Indian entities that have sought to become leaders in blockchain technology.
Although cryptocurrency and the technology underpinning many digital assets are two separate things, an insult to one is widely viewed as indicative of an overall stance, and India’s regulatory pressure effects have come as a complete surprise.
Tragically, the exchanges are not being forced to close under suspicion of fraud or other illegal activity. Instead, both have adopted protocols to refund users who have current floating interests, and both have exercised appropriate fiduciary duties in shutting down.
Safe Escape for Investors
Some 35,000 people utilize the exchanges and one of them, BTCXIndia, has already been running for four years.
What this means for future digital exchanges is not yet clear, but prominent citizens, among them the Crowdfire co-founder Nischal Shetty, have publicized plans to launch either tokens or exchanges in 2018, in Shetty’s case by March 2018.
On their website, BTCXIndia said that it would “halt cryptocurrency trading from March 5,” advising customers on how to go about retrieving funds currently held by the company.
Customers are directed through a process to enable withdrawal of their funds so that the exchange can close with clean books. They are also notified that accounts not voluntarily closed by March 4, 2018, will attract an annual wallet fee.
The company also reiterated that “XRP/INR trading will be halted effective from 05 March 2018.”
The company has halted deposits, and the website features the same pop-up disclaimer when a user logs in. Saying that “Deposits received, if any, will be automatically reverted to the respective bank accounts,” and, with that, the company is exiting the marketplace.
Without giving details of the pressure it is under, additional copy on the site advises that “ETH/INR trading has been halted from [March 1, 2018],” and that customers are “kindly advised to withdraw their INR and ETH.”
India Flies like a Hawk, Not a Dove
Regulatory pressure has resulted in some unfortunate obstacles to business as usual in India. In spite of welcoming rhetoric from the PM, legislators are squeezing too tight to make trading viable for some.
While discussion by lawmakers continues, the country is emerging as one lumped in with China, Israel and others who are openly hostile to virtual currencies. How India will marry this regulatory stance with national enthusiasm for blockchain technology and digital coins remains to be seen.
BTCXIndia relayed the following to its users:
“As we heard in the budget speech, the Indian government is discouraging cryptocurrency trading. This has been clear also by government actions in the last year, and has put our business under a lot of stress and put us in a position where we don’t feel that we can continue our business in a professional manner any longer.”
BTCXIndia dropped Bitcoin trading in 2017 to offer ripple (XRP) trading for Indian rupees (INR). Besides the two platforms now due to close, S Capital also holds 12 percent equity in Crypt E Tech Solution, the company enabling the Bitcoin payment service provider Blockonomics.
The company has said that after the closure of the two exchanges, it will be wholly focused on blockchain consultancy revenue.