It has been a month since the Reserve Bank of India ordered banks and financial institutions under its control to stop providing services to cryptocurrency exchanges. The central bank has given banks three months to end their relationships with crypto operators. However, trading volumes have risen alongside cryptocurrency prices in India despite an impending ban on banking services for entities that deal in cryptocurrencies, (e.g., exchanges).
Exchange operators, investors, and analysts say people are rushing to take advantage of a three-month window the Reserve Bank of India has given banks to sever ties with cryptocurrency traders and exchanges,
Reports by Indian cryptocurrency exchange Coindelta indicate that daily trading volumes are back to around $75 million, similar to levels it saw before the rule changes were announced.
Cryptocurrency proponents and investors hope that the government will reverse its strict rules on the digital assets rather than a complete ban. A panel of central bank representatives, the finance ministry, and the Securities and ExchangeBoard of India is expected to make imminent recommendations.
Shivam Thakral, CEO, and co-founder of New Delhi-based cryptocurrency exchange Buyucoin was quoted saying
New investors are coming to our exchanges while existing ones are regaining interest after the drop because they’re getting good value and are making money as the prices of cryptocurrencies move higher.
The other co-founder, Shubham Yadav, also said that cryptocurrency traders would continue despite the bank ban, so long as cryptocurrencies remained legal within India
The government of India concerns that cryptocurrency use could finance illegal activity and the finance minister declared in February that they should be banned as a payment system.
The central bank’s move to disallow bank services for entities that deal in cryptocurrencies has been challenged in court, including by Kali Digital Ecosystems, which had committed investment toward creating an exchange in India. The Delhi High Court will hear its arguments against the Reserve Bank of India’s ban on May 24, 2018.