Cryptocurrency exchanges claim that payment gateways block crypto transactions. A few days later, ET reported that ICICI bank was moving away from bitcoin or other cryptocurrencies. Bank ICICI on Thursday last week notified certain payment gateway operators to shut down online banking services for merchants who directly or indirectly participate in cryptocurrency transactions.
On Tuesday, Nischal Shetty, CEO of cryptocurrency exchange Wazirx, took to Twitter to express concern over the bank’s rejection of crypto transactions. He said the Supreme Court cited the Reserve Bank of India’s 2018 ban on banks’ cryptocurrency transactions lifted in 2020.
An executive at another crypto news platform, who said not to nominate, also said that despite Supreme Court instructions, the bank asked the payment gateway to block these transactions. “I ask Indian banks to update their compliance team on the Supreme Court ruling which awaits notifications from the Reserve Bank of India on cryptocurrencies,” Seti wrote on Twitter. “The Indian Supreme Court has explicitly approved the cryptocurrency industry, but the bank has refused to provide industrial banking services. It’s unfair.”
According to cryptocurrency executives telling them not to name it, ICICI Bank is one of the last major lenders to provide services to cryptocurrency exchanges. However, they said they closed the company’s current account two weeks ago. They added that other big banks should stay there as well. Reserve Bank of India ICICI Bank did not respond to ET inquiries.
It is not clear why banks have started to impose recent regulations. Executives of large payment gateway companies have said that in the case of the increase in penny token investment activity by individual investors and the increase in advertising activity in the crypto news industry, the number of users entering an unregulated industry may be a possible reason to protect investors.
He added that shutting down alliances is a mechanism that banks’ risk and compliance teams can adopt to minimize transactions. “Hopefully the government can step in to establish a framework for these cryptocurrency exchanges and transactions.” A few days ago, the ET company said, “The bank does not provide PG services to all member stores engaged in cryptocurrency or exchange transactions. I am under strict instructions which I do not.
Crypto exchanges in India could crash if the bank’s partners continue to ban the execution of crypto-related transactions on payment gateways. The CEO of the cryptocurrency exchange said, “We are using safeguards, but it could stagnate as it persists.”