The cryptocurrency exchanges were facing a tough time when rumors about a total crypto ban were floating around. Although the Reserve Bank of India [RBI] released its objection to banks using its old circular to refrain from processing crypto payments almost a month back, banks were still not keen on permitting crypto transactions. This was mainly due to the central bank’s unfavorable stance towards digital assets.
It has remained concerned over cryptocurrencies’ impact on financial stability and has informally asked the banks to steer clear of them. It comes as no surprise that this attitude towards cryptocurrencies by the payment gateways has led to the businesses being impacted.
As per Avinash Shekhar, a co-chief executive of ZebPay, banks were reluctant to do business. This resulted in the exchange delay settlements due to which even it was venturing out for other payment processing options.
“We have been talking to several payment partners but the progress has been slow.”
The exchanges were looking into tying up with smaller payment gateways, building their own payment processors, holding back on immediate settlements, or offering only peer-to-peer transactions, as per the heads of five crypto exchanges. Out of these, Coinswitch and WazirX have partnered with a smaller payment processing firm, Airpay, for instant transfers.
Meanwhile, other exchanges like Bitbns have built their own basic payment processor that allows essential transactions. However, these were not permanent solutions as per Gaurav Dahake, the CEO of Bitbns. Dahake opined:
“These are only stop-gap arrangements and not a solution to the problem the industry is facing.”
While more and more traders switch to P2P to avoid dealing with banks, it would only allow some relief to the exchanges. The bigger concern remains of banks’ unwillingness to process payments, especially during a rally when the exchanges require immediate settlements.
Indian traders have faced losses and missed opportunities due to the payment hurdles. Even if the exchanges join hands with small banks, they might not be able to execute high volumes of transactions, leading to failures as complained by users on several occasions.
The problem still prevails and there are only temporary solutions provided to the users.