Bitcoin exchanges shut shop in India
Comes on the heels of a RBI advisory notice about the risks of virtual currencies
India’s biggest Bitcoin trading platform, BuySellBitCo.in, on Thursday, suspended its operations, citing a recent Reserve Bank of India public advisory that highlighted the risks involved in dealing with virtual currencies.
The closure of BuySellBitCo.in, which sees about 12 million rupees of Bitcoin transactions every month, spooked other operators and users—with a number of other trading platforms such as INBRTC suspending services indefinitely.
A substantial number of Indian Bitcoin users also started selling the digital currency in late-evening trades, according to price index Coin Market Cap, with most of them worrying over the potential fluctuation in global prices.
The central bank had, on Tuesday, issued a notice, warning the public of the risks involved with virtual currencies while claiming that it could be used for money laundering and funding anti-terrorism activities. It stopped short, however, of issuing a ban or any other restrictions.
Bitcoin and other virtual currencies have begun to gain widespread acceptance in India, despite poor Internet penetration and a natural scepticism to assets not backed by tangible entities such as land.
When contacted, BuySellBitCo.in CEO Mahin Gupta refused to comment on what would happen to the investment that went into BuySellBitCo.in. However, the exchange’s website pointed out that it was suspending operations until a clearer operating framework could be found. “Post the RBI circular, we are suspending buy and sell operations. This is being done to protect the interests of our customers and in no way is a reflection of Bitcoin’s true potential or price,” the trading platform said.
Another trading platform, INBRTC, claimed that the “only option now was to suspend services until further arrangements could be made.”
“The RBI has stated the users of virtual currencies are exposed to both legal and financial risks. All trades which have been executed till December 26, 2013, will be processed completely. All pending orders will be cancelled and the deposits refunded,” the exchange said, in an online notice.
According to a senior banking official, most exchanges and Bitcoin ‘mining’ start-ups are reading the RBI’s advisory as a precursor to a possible clampdown, especially as the central bank has reportedly refused to talk with several exchanges and companies regarding regulation.
While countries such as China have banned financial companies from Bitcoin transactions, various U.S government agencies have said that Bitcoins offer legitimate benefits.
Some India Bitcoin companies, whether they are trading platforms or mining start-ups, however, are currently on the fence regarding continuing operations.
“Yes, BuySellBitco.in has shut shop. The RBI circular, however, said nothing new, nothing that we did not know. For our part, we have asked our legal team for an opinion, and are currently waiting for it,” said Satvik V, Founder, CoinMonk Ventures, who also organised India’s first Bitcoin conference earlier this month.
