Uncategorized

Top banks suspend accounts of major Bitcoin exchanges in India

MUMBAI: Top lenders including State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank have suspended some accounts of major Bitcoin exchanges in India, suspecting dubious transactions, three people aware of the development said. 


The banks have also sought additional collateral from the promoters of these exchanges on their borrowings and have capped cash withdrawals from the few accounts that are still operational. 


“Since last month, banks have been asking for additional collateral with 1:1ratio,” a person with knowledge of the matter said. 
The banks are scrutinising current accounts held by top Bitcoin exchanges, a second person said. Action has been initiated against the top 10 Bitcoin exchanges including Zebpay, Unocoin, CoinSecure and BtcxIndia, said four people aware of the matter. 

“The banks have not contacted the company or the promoters regarding the actions you have mentioned,” said Sathvik Vishwanath, promoter of Unocoin. 


Emailed queries to Zebpay, Coin-Secure and BtcxIndia did not elicit any response. SBI, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank did not respond to emails seeking comment. 


Bitcoins are a digital currency that can be used to buy products and services without any intermediary. People also buy Bitcoins, which has been banned in some countries, as an investment. 


Largely Unregulated 
Although India hasn’t banned Bitcoins, the cryptocurrency is largely unregulated. 


The total revenue of the top 10 exchanges in India could be about Rs 40,000 crore, according to tax officials scrutinising these companies. 


“These exchanges tend to show the total volumes both on buy and sell side as their revenue. In many instances, the exchanges themselves buy and sell cryptocurrencies on their own platform,” said an indirect tax official who is part of a team investigating the applicability of sales tax on Bitcoin exchanges for the previous financial year. 


Many of the exchanges operate at a margin of close to 20%, according to the people. The profit comes from the premium charged by the exchanges, the difference in the buying and selling price and when the exchanges themselves get involved in trading. 


Most of the exchanges have different rates for buying and selling cryptocurrency. Often, the difference between buying and selling rates is about 25%. 


The accounts of the exchanges in India were frozen after banks discovered they were used for reasons other than those stated when they were opened, the people said. At least eight accounts in various banks have been suspended, while others are being scrutinised and have had cash withdrawal limits imposed. Even the operational accounts could be suspended in the coming weeks, the people said.