Cryptocurrency exchanges in India are still struggling to secure banking partners
Commercial banks in India are said to be reluctant to do business with cryptocurrency exchanges in the country.
According to Reuters on Thursday, cryptocurrency trading platforms in India are still struggling to open accounts with financial institutions. While there is no crypto ban in India, banks are said to have acted on the advice of the Reserve Bank of India (RBI) to stay away from crypto exchanges.
Back in May, the RBI clarified its position on this issue and claimed that there was no ban on banks that operate cryptocurrency exchanges. In fact, India’s Supreme Court overturned an earlier RBI rule that prevented banks from providing account services to cryptocurrency trading platforms.
The lack of access to banking services resulted in significant disruptions such as the limited choice of instant withdrawals.
With banks remaining private, crypto exchanges in India are starting to consider alternative payment providers. Partnering with payment processing companies will become an appropriate security vulnerability prevention measure for platforms that wish to continue to offer crypto / fiat trading pairs.
Smaller payment channels like Airpay, based in Mumbai, reportedly offer instant transfers to exchanges like Coinswitch and WazirX owned by Binance. However, with India’s estimated 15 million crypto investors, such payment channels may not be enough.
To deal with the situation, large platforms like WazirX are required to suspend crypto / fiat trading on certain days when only peer-to-peer (P2P) transactions are available. Several other exchanges are said to use manual payments for bank deposits and withdrawals.
Cryptocurrency exchange stakeholders say reliance on P2P channels and other alternative trading methods can expose users to scammers.
Connected: The proposed law banning cryptocurrencies is under scrutiny by the Indian government
In the absence of a regulatory framework for cryptocurrencies in India, domestic exchanges are likely to continue to face such battles. As Cointelegraph previously reported, the government is currently weighing its options in order to find the best approach to regulating the crypto market.
Meanwhile, RBI remains firm on its anti-crypto stance, even if reports suggest that government agencies are moving towards nuanced regulation rather than an outright ban on cryptocurrencies.