India’s Paytm and Other Banks Skeptical about Cryptocurrencies

India's largest mobile commerce platform,Paytm Payments Bank, is freezing consumer's accounts speculative of trading cryptocurrencies.

By · Aug 12, 2020 . 6min read

Paytm bans Crypto accounts

Paytm Payments Bank, India’s largest mobile commerce platform, is freezing consumer’s accounts speculative of trading cryptocurrencies. With 45 million registered users, it is India’s largest mobile commerce platform. However, many users reported that Paytm is freezing bank accounts of Paytm payments bank account holders with suspicion of crypto trading.

Paytm is an Indian e-commerce payment system and financial technology company, based in Noida, Uttar Pradesh, India. With an initial investment of $2 million, Vijay Shekar established Paytm in August 2010 in Noida, a region adjacent to India’s capital New Delhi. Additionally, Paytm Payments Bank offers savings and current accounts with a debit card and making fast and secure payments.

Other Indian Banks Freezing Bank Accounts

Earlier, freezing of dozens of bitcoin exchanges took place. According to reports, close to 10 bitcoin exchanges had their accounts frozen by lenders including State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, and Yes Bank. When banks discovered that the accounts performed suspicious transactions, they suspended the exchanges’ account. Moreover, the suspension of approximately eight accounts in various banks took place.

“The RBI had intimated to the bank that they should take care with respect to the account of those dealing in bitcoins,” the officials stated in an interview. Freezing of bitcoin exchanges resulted due to a rise in volumes in India. Although India hasn’t banned Bitcoins, the cryptocurrency is largely unregulated.

RBI’s Take on Cryptocurrencies

On March 4, 2020, the RBI banking ban on crypto was set aside by the Supreme Court. Indian crypto enthusiasts celebrated the judgment. Nevertheless, it did not abolish the banks’ resentment toward crypto, as most banks declined to offer crypto services. After the elevating the RBI ban, various banks still refused to operate with crypto businesses, including exchanges.

The RBI stated that cryptocurrency is not banned in India, in a statement to Right to Information. The banks are reluctant to offers services; it seems that they have been waiting for RBI approval. The country still does not have a legal framework for cryptocurrencies, but the government says that a crypto bill is “awaiting approval.”

Conclusively, there are no regulations as to how cryptocurrencies must be treated in India. Although, the Indian crypto industry considers that the government will analyze and restructure the bill given that much has modified since it was submitted. With Paytm freezing consumer’s account, it is a matter of time to see how the cryptocurrency industry flourishes in India.

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