Various banks all over the world refuse to process Bitcoin transactions. This is a very big problem for consumers, but also for exchanges and other trading platforms. In India, Axis Bank, HDFC Bank, YES Bank, and ICICI Bank have now suspended all accounts of major exchanges. According to the banks, this is done due to “suspicious transactions”. A rather unusual explanation, but the closure will remain in place for some time to come.
In most cases, one individual bank closing bank accounts is nothing new. Especially not if it has something to do with Bitcoin transactions. Such behavior is rather common in many different countries around the world. Seeing four of the major banks in India making such a joint decision, is rather unusual. It’s also quite worrisome, considering how the Indian government is mulling over cryptocurrency regulation. If this is any indication, the situation will get very dire very soon.
Banks in India Make a Controversial Decision
More specifically, this is currently a big problem for major exchanges in India. Some bank accounts have been suspended indefinitely due to suspicious transactions. Additionally, there are now caps on cash withdrawals from the accounts which are left untouched. All of this creates a very unfavorable situation for all parties involved. The demand for additional collateral from exchanges is another big problem to take into account. None of these decisions are even remotely favorable.
It seems this may only be a first step in the crackdown on cryptocurrency activity in India. None of the banks informed exchanges about these changes, as they just went into effect overnight. Nor is anyone wiser as to how the situation can be resolved. It is evident this situation sets a very troublesome precedent. Not just in India, but also for the rest of the world. Cryptocurrency regulation is an active topic of debate around the globe. Taking this course of action will effectively cripple most exchanges in quick succession.
For now, it remains unclear how this development will unfold. A lot of big exchanges are suffering, but no platform will shut down trading anytime soon. Moreover, the decision by the banks is rather provocative, especially given the lack of any prior warning. The speculative nature of cryptocurrencies is of great concern to India’s government, At the same time, they shouldn’t meddle in matters they are unwilling to comprehend. It is unclear when the accounts will be restored in full. For now, patience is a virtue, but it is evident this situation needs to be resolved soon.
Header image courtesy of Shutterstock