Indian Banks Freezing Accounts Tied to Bitcoin or Cryptocurrency Trading
In yet another move to bring a greater control on the cryptocurrency trading activities in the country, banks in India are now cracking down on Bitcoin trade and accounts which are tied to any of the local Bitcoin and cryptocurrency exchanges in India.
As reported by the Indian news publication, The Economic Times, some of the top lending institutions like State Bank of India, ICICI Bank, Yes Bank, Axis Bank and HDFC bank have suspended some bank accounts sighting dubious transactions, as per officials who are familiar about this matter.
Some of the major cryptocurrency exchanges which have been under the scrutiny include Unocoin, CoinSecure, BtcxIndia and Zebpay. The source familiar with the matter also says that banks have asked the promoters of these exchanges to submit additional collaterals on their borrowings while keeping some of the accounts hostage of cash withdrawal. The source said: "Since last month, banks have been asking for additional collateral with 1:1ratio.”
Till now, around eight bank accounts have been frozen with more to follow soon, reports Economic Times. This development comes after one of the country’s advocate, Bisvas Chatterjee, filed a Public Interest Litigation (PIL) which asks to impose quick and immediate regulations on Bitcoin investments.
Indian Finance Minister Arun Jaitley has repeatedly denounced Bitcoin and other cryptocurrencies in the past calling it as a Ponzi scheme and also said that the government doesn’t recognize it as a legal tender. Back in November 2017, India’s Central Bank - The Reserve Bank of India (RBI) - said that it would not entertain Bitcoin. During a conference in Mumbai, RBI chief said: “Our current position on bitcoins is that we will not be using it for any payments and settlements…though the technology underlying cryptocurrencies will not end.”
Two weeks back, Mumbai-based popular cryptocurrency exchange Koinex said Indian banks have been choking transactions and forcing the exchange to run out of business. In an official blog post, the exchange said: “In the past few days, many of our users have faced difficulties with Indian Rupee (INR) withdrawals on Koinex. A tussle between our payment service partner and their bank has caused an indefinite delay in the settlement of a large portion of deposits to Koinex in the past two weeks. In these circumstances, we were constrained to temporarily suspend INR withdrawals, until the differences between the payment service provider and their bank are resolved.”
In the past two years, India’s participation in the global crypto markets is seen growing significantly and this news about the crackdown on crypto trading activities could possibly bring a negative sentiment in the market.
The Indian Tax Department is also seen going hard over scrutinizing crypto trading activities sighting issues of tax evasion. B.R. Balakrishnan, a director general of investigations at the income tax department said: “We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality. We found that investors were not reflecting it [cryptocurrency gains] on their tax returns and in many cases, the investment was not accounted for.”