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Indian Exchanges Continue to Flout Crypto Banking Ban

The Reserve Bank of India (RBI) banking ban on cryptocurrencies in India is having less impact than the government anticipated as more exchanges go back to work.

Three exchanges have announced the return of Indian rupee (INR) deposits, contrary to the government ruling in July, which effectively removed INR deposits and made withdrawals illegal. Petitions against the current ruling are up for Supreme Court scrutiny later next week. On 12 September, Koinex announced rupee deposits and withdrawals were now back in operation at their exchange, referring, rather romantically, to the “old times”:

“We are happy to announce the revival of INR in the crypto universe through a new peer-to-peer deposit and withdrawal mechanism for INR transactions… Just like the old times, users will be able to deposit and withdraw funds directly from their INR wallets.”

Another exchange, Coindelta, is back to business as usual too with an equally folksy announcement on their website:

“We have resumed back the INR deposits and withdrawals on Coindelta. Not only this, your old favorite INR markets are back where you can trade with your INR.”

Two other platforms, Koindesk and Giottus, are back too, the latter with a peer-to-peer (P2P) system, allowing its users to withdraw rupees. P2P has become a way that many exchanges have developed for their own homemade way of operating. Exchanges now using a P2P system for accessing and spending their rupees include WazirX, Intashift, and Coind.

WazirX head Nischal Shetty suggested that the exchange was seeing more that one match per minute through its P2P facility, with trading increasing daily, proving that crypto is very much alive and well on the subcontinent.

Rahul Chitale of Instashift said: “Since the last set of RBI-related developments in the past couple of months, we have continued to see strong 20-25% growth in trading volumes month on month over the last 2 quarters of our operation.”

In the meantime, Dabba growths in strength, profiting from the RBI ban. Working via the messaging app Telegram, with money as cash routed through the various channels in the hawala system. The money then passes either officially or unofficially to the foreign account where Bitcoins are transacted. Payment is then made in cash or check and the deal is done: no exchange, no Indian bank.

 

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Reserve Bank of India Says Bitcoin Is Not A Currency, Couldn’t Be More Wrong

The Reserve Bank of India (RBI) has declared that Bitcoin is not a currency in an affidavit to the Indian Supreme Court, during an ongoing legal battle regarding the ban on banks from facilitating any crypto-related activity in India. The Reserve Bank of India is completely wrong.

Specifically, the affidavit says “It is submitted that crypto-currencies fall short of being true currencies. It is further submitted that RBI does not consider virtual currencies such as Bitcoins as ‘currency’ under the extant laws. There are no enabling provisions under the extant law to treat Bitcoin as currency”. The RBI further argues that Bitcoin can’t be a currency because it has no physical form, and aren’t issued by the RBI.

The RBI could not be more wrong. Bitcoin has an excellent track record as a currency, it can be used to buy or sell anything in the world, and transactions sent with Bitcoin are instant and cryptographically secure. Combined with very low fees to send Bitcoin transactions, Bitcoin is actually better than fiat for international finance due to its speed and security. Bitcoin has 99.9% uptime and success when sending transactions, and is very reliable when used as a currency.

The RBI has led a month-long battle to stomp out Bitcoin and crypto in India, and they have succeeded at getting banks to stop offering accounts to crypto exchanges and traders. However, since Bitcoin itself is still legal in India, peer to peer Bitcoin dealing has proliferated across the country. It would probably be best for India to classify and regulate Bitcoin, like most other countries, instead of driving it underground where they have no control over it at all.

In reality, the RBI likely feels threatened by Bitcoin, since it is the first decentralized currency to spread across India, and is rapidly gaining value and use. This is unlike the Indian Rupee (INR), which has been experiencing massive inflation rates. The exchange rate has gone from INR 63 per USD to INR 72 per USD so far during 2018, yielding an annual inflation rate of 19% per year.

This inflation rate is approaching the hyper-inflation threshold, and as seen in other nations like Venezuela and Zimbabwe, once inflation begins increasing to double digits it usually continues to accelerate until ultimately a currency collapse occurs. Right now, the RBI’s biggest problem is the threat of a currency collapse, and they likely think capital outflows into the Bitcoin market will worsen the situation, which is why they are trying to make it illegal.

The collapse of fiat currencies like the INR may be inevitable, and it would be much better for India if Bitcoin stays legal so the country can adopt it over time, so the Indian financial system will still be functional in the event of a fiat collapse.

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Jonathan Stacke – Bitcoin in India

Jonathan Stacke – Bitcoin in India:

Jonathan Stacke writes on Bitcoin in India for his latest article on The Genesis Block (@TheGenesisBlock). Excerpts:

“With talk of inflation and capital controls familiar to the bitcoin community, one might think Indian citizens would be jumping at the opportunity to adopt the digital currency, yet the hurdles to wide-scale bitcoin proliferation in India may be significant for the foreseeable future. While demand for gold has grown in India, the multiple applications it offers culturally and industrially in addition to acting as an alternative store of wealth may mean that such demand does not translate to bitcoin.”

“[A correlation exists] between bitcoin adoption and internet penetration in a given country. India, with just 12.6% of its citizens having internet access, has the sixth lowest internet penetration of the 100 largest countries. Despite that fact, the size of the total Indian population – more than 1.2 billion – makes India the third largest internet-using population in the world, with 150 million users, behind only China and the US.”

“It is possible to buy and sell bitcoin through a number of websites including buysellbitco.in and there does appear to be a healthy LocalBitcoins market.”

“Not to be overlooked is India’s mobile phone penetration of 71%, or approximately 900 million total users. […] only 44 million Indians are smartphone subscribers.”

“M-PESA, the mobile payment system that has changed the lives of millions in Kenya recently rolled out in India. […] If mobile payment systems like these gain traction in India as they have in Africa, acceptance of digital currency would prove to be a less significant hurdle.”

“India had the highest remittance volume in the world in 2011 with $58 billion, or 3.1% of GDP, according to the World Bank.”

“Forward-thinking companies like Buttercoin have recently stepped in to apply the potential of bitcoin to these markets […]”

“The Reserve Bank of India has stated that it does not immediately intend to regulate bitcoin, but their historic actions indicate that may change soon enough […]”

 – http://thegenesisblock.com/bitcoin-in-india-drivers-and-barriers-to-adoption
 – (Further discussion of this article)

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