INDIAN BANKS SUSPENDING ACCOUNTS THAT ARE TIED TO CRYPTOCURRENCY EXCHANGES

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Heavy pressure mounts on crypto investors in India as the government and banks are going all-out in a major crackdown on trading activities in the digital assets. Earlier, Finance Minister Arun Jaitley has raised repeated warnings against investing these digital instruments and has already made it clear that the government doesn’t recognize Bitcoin and other cryptocurrencies as legal tenders.

In yet another major move, country’s top lending banking institutions like ICICI Bank, Axis Bank, HDFC Bank, and Yes Bank have recently suspended a few accounts tied to some of the crypto exchanges operating in the country, and which were suspected to have made dubious transactions.

Note that this decision by the bank is not directed by India’s Central Bank – The RBI (Reserve Bank of India). A banker involved in this matter said: “Reserve Bank of India has not issued any directive to us – it’s a cautionary move on our part. We are wary about the purpose for which some of these current accounts are being used.“

India’s local news publication The Economic Times reports that the banks have further asked for additional collateral from the promoters of these exchanges and have seized cash withdrawals from their accounts. A source familiar with the matter said: “Since last month, banks have been asking for additional collateral with 1:1ratio.”

As per the source, the banks have initiated action against top ten cryptocurrency exchanges of India some of which include Unococin, Zebpay, Koinex, BtcxIndia, and Coinsecure. While commenting on this move by the banks, Unocoin promoter Sathvik Vishwanath said: “The banks have not contacted the company or the promoters regarding the actions you have mentioned.”

Banks started scrutinizing exchanges two weeks back when popular exchange Koinex, based out of Mumbai, said that banks are freezing transactions for accounts liked to the exchange in a move to force them out of business. In a blog post, Koinex wrote: “In the past few days, many of our users have faced difficulties with Indian Rupee (INR) withdrawals on Koinex. A tussle between our payment service partner and their bank has caused an indefinite delay in the settlement of a large portion of deposits to Koinex in the past two weeks. In these circumstances, we were constrained to temporarily suspend INR withdrawals, until the differences between the payment service provider and their bank are resolved.”
Not only banks but the Indian tax authorities are also going hard on crypto investing. Sighting issues of money laundering and tax evasion, last Friday, the Indian tax department said that it has sent notices to “tens of thousands of people dealing with cryptocurrency”, as reported by Reuters.

The Indian tax department also released some figures stating there has been a huge surge in crypto trading activities and around $3.5 billion worth and more transactions are reportedly done in past one and half years.

A tax official said: “We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality.”

Last month, the tax department also sent out notices to all crypto investors asking them to report their financial gains and pay the due taxes. B.R. Balakrishnan, a director general of investigations at the income tax department was quoted saying: “We found that investors were not reflecting it on their tax returns and in many cases, the [cryptocurrency] investment was not accounted for.”

Source: CoinDesk News