Zebpay, India's largest cryptocurrency exchange shuts down after RBI's Bitcoin ban

Zebpay, the largest cryptocurrency exchange in India, today announced the closure of its activities. The move comes five months after RBI banned banks from providing financial services to crypto exchanges. The Finance Ministry, earlier this year, had said that trading in Bitcoin and virtual currencies have no protection.

"At 4 p.m. today (28 September 2018), we will cancel all unexecuted crypto-to-crypto orders and credit your coins/tokens back to your Zebpay wallet. No new orders will be accepted until further notice, the crypto exchange said in a blog post.

The crypto exchange, however, said its Zebpay wallet will continue to work even after the exchange stops. "You are free to deposit and withdraw coins/tokens into your wallet," it said.

"Lakhs of Indians took their first step into the world of Bitcoin using the Zebpay app. Your trust has been the pillar of our strength. 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," the company said in a blog.

"However, the recent past has been extremely difficult. The curb on bank accounts has crippled our, and our customer's, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business," it added.

After the RBI's April-5 circular, Zebpay had disabled the rupee deposit and withdrawal options on its mobile app.

The RBI's circular came after it was observed that the several companies had started dealing in over thousands of digital currencies which, the government and the RBI claim, had no intrinsic value - therefore leaving the investors at risk. The RBI's move was an attempt to ring-fence regulated entities from the risks associated with cryptocurrencies.

In a statement issued last year in December, the Finance Ministry said: "Virtual currencies are not backed by government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as 'Coins'. There is however no physical attribute to these coins. Therefore, VC are neither currencies nor coins."