Indian Crypto Exchange Challenges Regulators
India’s government has responded more harshly to cryptocurrency and blockchain technologies than most countries in the world. Though part of this may be attributable to the high amount of fraud and heavy financial crime that occurred out of the Indian country, experts still speculate as to whether or not the strict regulatory approach by the Reserve Bank of India will actually help to curve major crimes—or if it will simply stifle and prevent progress in the growing industries.
The Reserve Bank of India had released a declaration of circle earlier this year, declaring that no banks were allowed to carry out any transaction that involved finances that were in any way linked to cryptocurrencies.
For crypto exchanges which are many within the country, the ramifications of this decision were severe. They were effectively unable to finance or make use of financial services in the traditional way, and they were not even allowed to financially interact with banks that they had already been working with before the enigmatic ban by the Reserve Bank of India.
But one company is fighting back against the unfair regulation. CoinRecoil is a large cryptocurrency exchange based out of India. The company decided to file an official petition against the Reserve Bank, alleging that the bank had violated Article 19(1)(g) of the Constitution of India.
A Changing Crypto Space
Immediately after the regulation was put into place by the federal bank, the cryptocurrency community saw the results in their own country. Several major cryptocurrencies were left without access to their banks as banking partners quickly scrambled to withdraw their own support of cryptocurrency and exchange platforms. Though the law itself was part of the motivation for this unfortunate trend, many banks were also responding to lowkey rumors that an even tougher stance on regulation was coming through the pipes.
The exchanges left without a bank through which to finance quickly landed on their feet, though. They began to implement peer-to-peer trading systems, which allowed different traders to transfer their funds without the need for a central bank’s support.
The Legal Battle
CoinRecoil is the only bank in India that charges no kind of withdrawal fees. In part due to this irregularity, the company is arguing in the courts currently that they operate in a legal “grey area.” Additionally, they articulated in an official statement that their TrueUSD token is backed by true USD, which means that users can at any time trade their currency for legitimate fiat currency from the United States.
Plans to Expand
CoinRecoil has also been clear in their interest in expanding to a more global presence. The company’s director, Rupesh Panchal, expanded to say that they need to first gain clarity from key regulators and even policymakers in India before they can travel into the confusing and complex regulatory waters outside of the home country.
The Beta Version of the CoinRecoil platform has already been launched, and the company wants to increase the amount of cryptocurrencies featured on their site to 50 before October of this year.