Indian crypto-exchange Unocoin has announced that it is suspending all rupee deposits and withdrawals on the orders of the Indian central bank, the Reserve Bank of India (RBI).
According to the exchange notice, deposits and withdrawals will be resumed once “an alternative method of funding is identified and deployed.” At present deposits and withdrawals are still available in crypto-assets. It is also still possible to use existing rupee balances to trade Bitcoin and Ethereum. Crypto-rupee and crypto-crypto trading is still in place, though customers will be able to neither fund their accounts with additional rupees nor take profits in Indian fiat currency.
Central Bank Crackdown
The cryptocurrency situation is particularly unclear in India. Back in April the RBI issued a notice prohibiting all regulated financial institutions from dealing in, or providing services related to, cryptocurrencies. This ban was upheld by the Indian Supreme Court earlier this month.
However, while some factions in the government may favour an all-out ban on digital assets, others prefer the establishment of a regulated model. A government committee set up to study the industry is reported to be leaning towards treating cryptocurrencies as commodities.
One anonymous member of the committee said that he didn’t think that “anyone is really thinking of banning cryptocurrencies altogether,” rather that the concern was in “regulating the trade, and we need to know where the money is coming from.”
Knowing where the money is coming from, and where it is going, is the primary preoccupation of the Indian authorities who are worried about the potential for cryptocurrencies to be used for money laundering.
According to the New Indian Express, new regulations are expected to be released by September. A senior Finance Ministry official told the newspaper that , “the government will finally come up with detailed guidelines on cryptocurrency.” Apparently there is already a draft version, and the committee is consulting with the various stakeholders, including, “market regulator SEBI, India’s central bank RBI and the Internet and Mobile Association of India (IAMAI).”
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