Zebpay, one of India’s well-known cryptocurrency exchanges, is shutting down.
The reason for this move by the exchange is attributed to the Indian central bank- Reserve Bank of India’s (RBI) circular that is prohibiting banks to undertake any cryptocurrency-related transactions. The bank informed on 27th September 2018 on Twitter.
We are stopping our exchange. At 4 PM today, we will cancel unexecuted orders & credit your coins to your Zebpay wallet. No new orders will be accepted. The Zebpay wallet will work even after the exchange stops.
— zebpay (@zebpay) September 28, 2018
“The curb on bank accounts has crippled our, and our customers’, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business,” Zebpay said in the blog post on. “As a result, we are stopping our exchange activities.”
RBI issued a circular, dated April 6th, on ‘Prohibition on dealing in Virtual Currencies’. This circular stated that the Central Bank will not deal with or provide any service to entities trading with any cryptocurrencies such as Bitcoin. RBI had given three months to banks to resolve their businesses with the cryptocurrency trading platforms and other related entities, and consumers dealing with cryptocurrencies.
At the time it was said that RBI has not made an earnest effort to fully study and understand the nature, principles, and usage of cryptocurrencies before publishing the ban as no internal committee had been formed to investigate the alleged risks associated with trading digital coins.
Following circular India’s cryptocurrency exchanges took the RBI and other government agencies to court, and the said legal battle has dragged on for months. India’s supreme court is yet to provide a verdict on the matter. For exchanges like Zebpay, this interim has evidently turned out to be too much to deal with.
Zebpay in the Medium blog said:
“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. However, the recent past has been extremely difficult.”
Zebpay, found in 2015, reportedly hit 200,000 app downloads and an annual turnover of Rs 500 crore (around $68 million) in less than two years. At its peak in late 2017, the exchange was totaling between 300,000 and 400,000 users every month.
In December 2017 Indian tax authorities started looking into the affairs of multiple cryptocurrency exchanges, ultimately leading to the RBI and the country’s finance ministry walking in. In January 2018, India had approximately 10 cryptocurrency exchanges with 5 million users, bringing in monthly volumes of Rs10,000 crore ($1.5 billion).
The legal battle that is ongoing now between Internet and Mobile Association of India [IAMAI] and RBI s taking a toll on a number of Indian cryptocurrency exchanges including Unocoin, WazirX, and Koinex, who are finding alternatives to keep the money moving, like shifting to crypto-to-crypto and peer-to-peer trade.
Nischal Shetty, founder and CEO of WazirX, another Indian cryptocurrency exchange said:
“While Zebpay has been a competitor, it’s unfortunate to see they’re shutting down their exchange. The crypto community needs to stay strong & stick together. We need to keep the crypto fire burning in India.”