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India has been a significant market on the global economic scene for years now, thanks to its massive size. This is why many within the crypto space have been gutted by the government’s current stance on cryptocurrencies. However, it would seem that law enforcement in India has also been hamstrung by the country’s hard crypto laws.
Frozen, unreachable funds
According to an article published by the Times of India on October 3, police officers in Pune, a city in the Eastern part of India, have sought assistance from a local court in order to transfer 244 cryptocurrency units (worth about $1.4 million) which were seized from a local crypto Ponzi scheme operation.
Per the article, Pune cyber police explained that the assets seized were blocked in the bank account of Discidium Internet, a company they hired to convert them into Rupees. The account was reportedly blocked by the Reserve Bank of India, and as such, senior inspector Jairam Paygude revealed that the Central Bank of India was unable to make the transfer to the Pune treasury branch of the State Bank of India.
India and its “no-nonsense” crypto policies
Anyone who knows about India and cryptocurrencies knows that the relationship between the country and the budding space has been at a standstill for the better part of two years now. However, while the stagnant relationship has been seen by many as still manageable, things took a significant turn for the worse this year.
Last month, Reuters reported that the government is currently reviewing the “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019,” a draft bill which will propose a decade-long prison term on anyone who is found mining, holding, selling, transferring, or even remotely dealing in crypto assets.
However, banks and cryptocurrencies in India have also been on the outs for quite a while. Back in April 2018, the Reserve Bank issued a circular which prohibited payment system providers and banks in the country from dealing in cryptocurrencies.
Essentially, the Reserve Bank was asking these businesses not to register, trade, and maintain accounts with cryptocurrencies. Giving loans against virtual tokens and serving cryptocurrency exchanges was also prohibited, as well.
The ban went into effect a few months later, with banks subsequently closing down the accounts of several crypto exchanges in the country. As a result of this, most of the exchange operators in India have either been forced to set up shop somewhere else or close their businesses.
Koinex, a popular exchange in the country, announced its shutdown in June, citing that their bank accounts with user funds are still frozen, and the capital is held up.” Pretty much the same reason was given by Coinome when it shut down back in May, and the list really goes on from there.
All crypto markets on Coinome will be suspended, effective 2pm on May 15th, 2019. Customers are requested to withdraw all their crypto assets from Coinome at the earliest.
— Coinome (@CoinomeOfficial) May 9, 2019
Back in August, Sidharth Sogani, the chief executive of crypto and blockchain research firm Crebaco Global Inc., reported that India stands to lose a $12.9 billion market by banning cryptocurrencies. Still, the government seems to be going full steam ahead.
It is highly unlikely that this snafu will change the government’s mind about cryptocurrencies. At this point, nothing short of a miracle will be enough to make the Indian government take a heel turn on their crypto policies.