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What Is the Status of Cryptocurrency Trading in India?

By SiliconIndia   |   Wednesday, May 16, 2018
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Leading cryptocurrency broker Olsson Capital recently conducted an intensive analysis of virtual currency trading in India. The results of their exhaustive research found that the situation is highly fluid and subject to a series of High Court hearings in May, June and July 2018.

Background

Banks in India were recently issued a new directive to cease all financial deposits/withdrawals to cryptocurrency exchanges. The decision was made by the Reserve Bank of India and featured in the Economic Times of India. The current state of cryptocurrency trading, according to Bitcoin traders is that the activity is not illegal, and banks should not be curtailing financial transactions processing to these exchanges. Virtual currencies a.k.a. digital currencies operate without let or hindrance, and cryptocurrency traders have implored banks to continue permitting transactions with these exchanges.

In April 2018, the RBI indicated that financial institutions would no longer be permitted to deal with investments or trades in virtual currencies. This decision was met with a public outcry, given that it does not appear to have any constitutional grounds. Financial institutions and banks across India have up until Thursday, 5 July 2018 to comply with this latest directive. In the interim, Bitcoin and other cryptocurrency exchanges are seeking to overturn the RBI ruling. Various cryptocurrency exchanges are said to have their cases heard at the Delhi High Court later in May, hoping for a reversal in bank policy. Various writ petitions have been launched challenging the constitutional validity of such measures.

Crypto to Crypto Trading Activity Displaces Fiat Currency

Fortunately for cryptocurrency traders, there are many viable workarounds for trading cryptocurrency. These include crypto to crypto trading activity as a means of obviating the Reeserve Bank of India directive. The absence of fiat currency a.k.a. fiduciary currency will have an impact on cryptocurrency trading in the world’s 2 nd most populous country. Crypto to crypto trading pairs are a relatively new financial transmissions mechanism on the scene. These include crypto cross pairs such as ETH/BTC, BCH/BTC, XRP/BTC etc.

The size of the cryptocurrency trading market in India is estimated at 5 million traders, and that’s a drop in the bucket compared to what is possible in this burgeoning tech haven. The huge number of cryptocurrency traders in India comprises just 1% of the daily trading volume for cryptocurrency. While the contentious decision by the RBI is being appealed by industry aficionados, cryptocurrency exchanges are pulling no punches as they seek effective ways to maintain operations without bank intervention.

While these measures are being debated at the highest level, traders in India can still cash out crypto to fiat currency, including JPY, EUR, USD, and GBP. Various exchanges currently abound, including Coinbase which operates across 30 countries and allows clients to withdraw USD to their bank accounts. Various options such as Bitstamp, Gemini and the Finland-based LocalBitcoins abound. There are many viable cryptocurrency exchanges allowing clients to cash out their cryptocurrency accounts. Nowadays, it’s entirely possible to find a reputable automatic teller machine that allows you to cash out Bitcoin, although compliance-related issues will come into play with things like taxation.

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