Top Banks To Freeze Accounts Of Significant Bitcoin Exchanges In India

Leading banks like State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank have suspended accounts of some of the most important Bitcoin exchanges in India, suspecting dubious trades.The banks have also sought an additional guarantee from the promoters of these exchanges on their borrowings and also have restricted cash withdrawals from the few accounts which are still functional.

As per the sources, banks are scrutinising current accounts held by top Bitcoin Exchanges in India. Actions are taken against the top 10 Bitcoin exchanges such as Zebpay, Unocoin, CoinSecure, and BtcxIndia.

Sathvik Vishwanath, promoter of Unocoin stated that the “banks haven’t contacted the company or the promoters concerning the activities mentioned.”

Bitcoin is a virtual currency which could be used to purchase goods and services without any mediators. Individuals also purchase Bitcoins as an investment.

LARGELY UNREGULATED

Although India hasn’t banned Bitcoins, the crypto-currency is largely unregulated. The total revenue of the top 10 exchanges in India could be around 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 crypto-currencies on their own platform,” stated an indirect tax official who was the part of a team investigating the applicability of sales tax on Bitcoin exchanges last year. Many of the exchanges operate at a margin close to 20%. The profit comes from the premium charged, the difference the buying and selling price and also when the exchanges themselves get involved in trading. Most of the exchanges have different rates for buying and selling crypto-currency. 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. At least eight accounts in various banks have been suspended, while others are being scrutinised and have had cash withdrawal limits imposed on them. Even the operational accounts could be suspended in the coming weeks.

A banker involved in the matter said

 “RESERVE BANK OF INDIA HAS NOT ISSUED ANY DIRECTIVE TO US – IT’S A CAUTIONARY MOVE ON OUR PART, AS WE ARE CONCERNED ABOUT THE PURPOSE OF THESE ACCOUNTS”

DOUBTFUL TRANSACTION REPORTS

We’ve asked a number of companies to explain the business in which they’re involved and why it wasn’t specified when opening the accounts,” said another banker who didn’t want to be identified. “We are also flagging a number of those questionable transactions with the concerned agencies.

Many bitcoin exchanges are now facing the cash flow issues as they are not able to operate through their bank accounts. Some promoters are even looking to pledge their personal property as security.

In December the income tax department started monitoring the top bitcoin exchanges. The Indian government and the Reserve Bank of India have issued several warnings against working with Bitcoins & the former even comparing it with a Ponzi scheme. India hasn’t prohibited Bitcoins, even though eight major countries including China have banned the digital currency.

The promoters of some crypto-currency exchanges have tried unsuccessfully to get an appointment with senior administration officials for the past month, according to a senior executive working with one of the exchanges.

DOUBTFUL TRANSACTION REPORTS

In December the income tax department started monitoring the top Bitcoin Exchanges in India. The Indian government and the Reserve Bank of India have issued several warnings against working with Bitcoins & the former even comparing it with a Ponzi scheme. India hasn’t prohibited Bitcoins, even though eight major countries including China have banned the digital currency. A number of companies have been asked to explain the business in which they’re involved and why it wasn’t specified when opening the accounts,” said another banker who didn’t want to be identified. “We are also flagging a number of those questionable transactions with the concerned agencies.

Many bitcoin exchanges are now facing the cash flow issues as they are not able to operate through their bank accounts. Some promoters are even looking to pledge their personal property as security.

The promoters of some crypto-currency exchanges have tried unsuccessfully to get an appointment with senior administration officials for the past month, according to a senior executive working with one of the exchanges.

Source: http://www.unkrypted.com/banks-freeze-accounts-of-bitcoin-exchanges-in-india/

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Created on Jan 22nd 2018 23:40. Viewed 391 times.

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