Zebpay, the largest cryptocurrency exchange in India, has shut down. According to a blog post, the company cites difficulties due to recent restrictions choking crypto activities. Zebpay’s decision to close the exchange follows an industry-wide ban by the Reserve Bank of India, the country’s central bank. In April, the RBI effectively stopped banks from doing business with any crypto-related financial service or exchange.
According to the announcement,
“The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business. As a result, we are stopping our exchange activities. At 4 p.m. today (28 September 2018), we will cancel all unexecuted crypto-to-crypto orders and credit your coins / tokens back to your Zebpay wallet. No new orders will be accepted until further notice.”
Although Zebpay disabled rupee deposits and withdrawals on its mobile app following the RBI circular in April which prohibited crypto-related activities, the crypto exchange says it will continue to allow customers to withdraw coins/tokens into their wallets.
“Lakhs of Indians took their first step into the world of Bitcoin using the Zebpay app. Your trust has been the pillar of our strength. Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain,” the statement reads.
Several major crypto players in India took the RBI to court to overturn the widespread crackdown, but ongoing postponements by the court to hear the cases are starting to bleed exchanges dry, stifling day-to-day operations and stoking fears that the lack of expediency means the courts will ultimately not make a judgment in favor of the exchanges.
In November of last year, Sandeep Goenka, co-founder of Zebpay, told Quartz, “The extent of interest in bitcoins is at unprecedented levels. Every time prices increase, investors who were sitting on the fence and were skeptical do enter the ecosystem.”
Interest in Zebpay soared, leading to 300,000 and 400,000 new users every month by the end of 2017.
At that time, authorities began hammering Indian exchanges, creating the initial strain and division among government regulators and private enterprises. Tax officials began investigating tax collection from exchanges and investors, causing the first wave of crypto consumers to seek out peer-to-peer decentralized exchanges.
Shortly thereafter the Finance Ministry condemned virtual currencies by issuing a statement.
“VCs are not backed by Government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’. There is however no physical attribute to these coins. Therefore, Virtual ‘Currencies’ (VCs) are neither currencies nor coins. The Government or Reserve Bank of India has not authorised any VCs as a medium of exchange. Further, the Government or any other regulator in India has not given license to any agency for working as exchange or any other kind of intermediary for any VC. Persons dealing in them must consider these facts and beware of the risks involved in dealing in VCs.”
The argument has framed today’s ongoing division in India between regulators who want to ban the industry completely and crypto enthusiasts who say the thriving crypto market underpins the wave of the financial future.