Tag: BillDesk

Just as they were breathing easy with the Reserve Bank of India clarifying that banks can do due diligence of crypto clients, Indian crypto exchanges have been hit by another hurdle.

With the RBI reiterating that it does not favour cryptocurrencies, major payment gateways have pulled out hitting transactions.

Customer complaints have inundated all India’s key exchanges as the pullout by major payment gateways, including Razorpay, PayU and BillDesk has hit transactions, according to social media and users.

The options

Options being resorted to including tying up with smaller payment gateways, building their own payment processors, holding back on immediate settlements or offering only peer-to-peer transactions.

At least two exchanges have tied up with smaller payment processing firm, Airpay, as its larger peers have cut ties.

Some crypto exchanges, such as WazirX, are forced to stick only to peer-to-peer transactions on certain days, while others, such as Vauld, allow bank transfers with manual settlement as they hunt for a payment processor, backing up settlements.

Smaller payment gateways have not proved very successful in executing high volumes of transactions, leading to failures that have resulted in a flood of user complaints.

Others, such as Bitbns, have built their own basic payment processor, allowing some essential transactions since the systems do not require prior approval from the Reserve Bank of India, the central bank.

A grey area

Despite the boom, cryptocurrencies are in a grey area in India, with the Reserve Bank hostile towards it and the government unsure about its prospects.

There is no legislation or regulatory code yet to govern the crypto ecosystem, leading to confusion among customers, businesses and financial institutions providing banking services.

In 2018, the Reserve Bank of India barred financial institutions from supporting crypto transactions, which the Supreme Court overturned in 2020. The government has circulated a draft bill outlawing all cryptocurrency activities, which has been under discussion since 2019.

Last month, the RBI asked banks not to cite its 2018 circular and clarified that banks can do their own KYC for crypto clients. With this, banks are now reassessing the situation, but several banks currently lack the technical expertise to make a supervisory assessment on these transactions.