Indian Crypto Exchanges Resume Fiat Services 24 Hours After Supreme Court Ruling

Major Indian crypto exchanges Unocoin and WazirX have resumed fiat deposits less than a day after the Supreme Court quashed restrictions on banks’ services to crypto firms in the country.

Unocoin, which claims to have been the first entrant into the Bitcoin space in India since its founding in 2013, has been described by local analysts as an “icon of the crypto industry.”

The exchange went live with rupee (INR) and bank account deposits and withdrawals earlier today, March 5, followed by INR deposits on Binance-owned WazirX.

Blockstream CEO Adam Back — the inventor of the hashcash proof-of-work system later used in Bitcoin’s (BTC) mining algorithm — immediately welcomed the news of Unocoin’s return to full services, tweeting: “Game on #bitcoin.”

The industry rallies

As reported, exchanges in the country had faced a moratorium on banking services since the central bank, the Reserve Bank of India (RBI), implemented its contentious ban on banks’ provision to crypto firms back in 2018.

Last year, amid increasing regulatory uncertainty for crypto in the country, Unocoin had been forced to lay off 50% of its staff. The platform has remained open since the RBI restrictions came into effect, yet suspended all fiat deposits in the summer of 2018.

Yesterday, RBI’s decision was reversed by a bench of three justices at the Supreme Court, who ruled that the ban was unconstitutional.

Hearings for the landmark case — filed in response to a flurry of public and industry-led petitions — had been held over two weeks this January. 

Kashif Raza — co-founder of the Indian crypto regulatory news and analysis platform Crypto Kanoon — told Cointelegraph yesterday that the ruling was “historic,” believing it would bring “positivity to the entire ecosystem.”

Raza’s optimism appears to have been borne out swiftly, with fellow domestic exchange CoinDCX yesterday re-opening fiat services less than six hours after the Supreme Court ruling was announced.

Ashish Singal — hackathon star and co-founder and CEO of Indian blockchain payments startup CRUXPay — told Cointelegraph he believes the ruling will pave the way for “favorable regulations protecting all stakeholders” and prompt renewed interest in Indian crypto markets from national and international players alike. 

Closing a chapter on tougher times

While in effect, RBI’s ban had forced industry players to improvise strategies to continue to serve clients. In fall 2018, two of Unocoin’s co-founders were arrested for having opened India’s first Bitcoin (BTC) ATM. 

This notwithstanding the fact that the machine had been specifically designed to not accept debit or credit cards in order to avoid any interaction with the banking system.

The controversial case — which had spiraled amid RBI’s moratorium and confusion as to the legal status of crypto in the country — eventually folded, with both colleagues released.

Looking ahead

As positive momentum gathers pace, one further potential challenge remains for the legal and regulatory climate for crypto in India. 

In fall 2019, the Indian government had opted to delay the introduction of a draft bill on a cryptocurrency ban to parliament in the 2019 winter session. 

The bill would reportedly seek not only to impose a blanket ban on the use of crypto in India but also to pave the way for a state-backed “Digital Rupee” issued by the central bank. 

Speaking to Cointelegraph yesterday, Raza nonetheless argued that he believes the government is more likely to fall into line with Financial Action Task Force guidance, rather than cement a hardline stance.