Paytm Payments Bank has stopped providing banking support to cryptocurrency exchanges, such as WazirX, ZebPay, and CoinSwitch Kuber, the exchanges said in separate statements on Friday
Paytm Payments Bank has stopped providing banking support to cryptocurrency exchanges, such as WazirX, ZebPay, and CoinSwitch Kuber, the exchanges said in separate statements on Friday .
The move is yet another setback for the crypto industry, which is struggling to find banking partners and comes in the wake of the Reserve Bank of India (RBI) earlier this month informally asking banks to stay away from businesses dealing in cryptocurrencies. Earlier, ICICI Bank and Yes Bank had also severed ties with the sector.
Paytm did not comment on the development.
India’s biggest crypto exchange, WazirX, with more than four million users, however, said it will soon add two more channels for bank deposits.
At present, users can only add funds to the exchange via peer-to-peer (P2P) transactions. Under this route, users convert their rupees to crypto tether (USDT) by trading with other users. The exchange facilitates the conversion through an escrow mechanism, but does not directly accept rupee credits. USDT is a stablecoin pegged to the US dollar.
In a nutshell, if you are selling any crypto, you have to convert your digital asset to USDT and then sell the USDT for rupees using WazirX P2P. While buying, you have to convert your rupees to USDT and then trade in a crypto. However, this system is cumbersome for an average investor.
“WazirX users are using the P2P route, but as an industry we need a bigger solution, which is banking support. P2P is not as good as bank deposit and we don’t want users to take the extra step. We are in talks with multiple banks and we are looking to open up two more channels for deposits soon,” said Siddharth Menon, co-founder and chief operating officer (COO), WazirX.
Another crypto exchange, BuyUcoin, said Paytm Payments Bank suspended support to the exchange without an official reason. “As a result, the users on our platform are facing problems while trading. We are relying on other partners to serve our users and hoping for a solution to this problem soon,” said Shivam Thakral, chief executive officer, BuyUcoin.
Industry executives maintained that crypto is 100% legal in India and preventing people from engaging in legal and legitimate business is not justifiable.
“The Supreme Court decision is the law of the land. It said that banks have the right to do business with crypto firms,” said Vikram Rangala, COO, ZebPay.
The exchange said it is implementing new solutions to continue to provide service to customers, especially at a time that the industry is witnessing record volumes and demand for crypto investing.
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