Zebpay, one of India’s largest cryptocurrency exchanges, is shutting shop.
Hamstrung for months by the Indian central bank’s diktat disallowing banks to undertake any cryptocurrency-related transactions, the company said it was shuttering its exchange.
“The curb on bank accounts has crippled our, and our customers’, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business,” Zebpay said in a blog post. “As a result, we are stopping our exchange activities.”
The Reserve Bank of India (RBI) has been unsympathetic to virtual currencies (VCs) for years, a stance that hardened shortly after a price boom in late 2017 piqued investor interest in bitcoin and other cryptocurrencies. Then, in April 2018, the central bank cracked down on the ecosystem, asking lenders to “not deal with or provide services to any individual or business entities dealing with or settling VCs.”
Facing a deathblow, India’s cryptocurrency exchanges took the RBI and other government agencies to court, and the ensuing legal battle has dragged on for months. India’s supreme court is yet to rule on the matter. For players like Zebpay, this wait has evidently turned out to be too much to deal with.
“Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain,” Zebpay explained in its blog post. “However, the recent past has been extremely difficult.”
Founded in 2015, Zebpay latched on to the coattails of Indian investors’ early interest in cryptocurrencies, reportedly hitting 200,000 app downloads and an annual turnover of Rs500 crore in less than two years. At its peak in late 2017, the exchange was adding between 300,000 and 400,000 users every month. “The extent of interest in bitcoins is at unprecedented levels,” Sandeep Goenka, co-founder of Zebpay, told Quartz in November 2017. “Every time prices increase, investors who were sitting on the fence and were skeptical do enter the ecosystem.”
But the party began winding down in December. Indian tax authorities began looking into the affairs of multiple cryptocurrency exchanges, eventually leading to the RBI and the country’s finance ministry stepping in. In January 2018, according to industry estimates, India had 10 cryptocurrency exchanges with five million users, bringing in monthly volumes of Rs10,000 crore ($1.5 billion).
It’s been one blow after another since then, while a number of exchanges, including Zebpay, Unocoin, WazirX, and Koinex, shifted to crypto-to-crypto and peer-to-peer trade just to survive.
The already hurting Indian cryptocurrency ecosystem is now openly bleeding.
“While Zebpay has been a competitor, it’s unfortunate to see they’re shutting down their exchange. The crypto community needs to stay strong and stick together,” said Nischal Shetty, founder and CEO of WazirX, another such exchange. “We need to keep the crypto fire burning in India.”