Reopened Indian exchanges could lead to a crypto boom

Less than 6 hours after the Reserve Bank of India (RBI)’s ban on crypto trading was overturned by the Supreme Court, top cryptocurrency exchanges in India started to process bank deposits.

Both CoinDCX and WazirX, a top cryptocurrency exchange in India acquired by Binance, have begun to facilitate bank deposits in Indian rupees (INR) for the first time in 19 months.

Nischal Shetty, the CEO of WazirX, confirmed in a Medium post that INR deposits are back on the exchange after “a long wait,” and that the exchange is working on enabling INR withdrawals.

CoinDCX, which added bank transfer support almost immediately after the ban was lifted, said that the company is working towards full banking integration in the near-term.

The company’s co-founder and CEO Sumit Gupta reaffirmed that a comprehensive banking integration remains the firm’s priority.

The ban’s impact on trading volume

The Reserve Bank of India’s ban came into force in December 2018, leading to several Indian crypto exchanges shutting down over the following year, such as Zebpay and Koinex. Indian exchanges processed around $100 to $300 million in daily volume up to December 2018.

“Within four months of operations, Koinex became India’s largest and favourite digital assets exchange — recording $265M in trading volume and on boarding 40K+ new users in 24 hours at peak in the month of December,” Rahul Raj, the founder and CEO of Koinex, said in July 2019. 

According to cumulative data calculated tradingview.com, the BTC-INR pair processed around $6.2 billion in weekly volume in early 2018, before the crypto trading ban was imposed by the RBI in April of the same year.

It’s unclear whether the crypto market of India will recover to reach similar levels of demand as before the ban. The Indian crypto exchange market saw consistently high volume in 2017; a trader at digital assets investment firm Arca described India as a “powerhouse in crypto” until the ban was imposed. Shortly after the ban was lifted, the price of WRX, WazirX's native token, shot up amid increased trading activity.

A long road ahead

There is still significant work to do to clear up regulatory uncertainty in India; the Supreme Court’s ruling is a first step towards opening the local cryptocurrency exchange market and blockchain industry to both local companies and foreign players.

“We have won! You have won. But we have a long road ahead,” Shetty said. “Together with your support, we’ll work towards building the crypto regulatory framework in India,”.

Unlike South Korea and Japan, there are no clear regulatory frameworks in place that legitimize the local cryptocurrency exchange market in India as of yet. 

Meanwhile, the RBI is not backing down without a fight; the central bank is looking to file a review petition with the Supreme Court, asking to reinstate its circular restricting cryptocurrencies in the country.