Koinex, the reputed crypto exchange of India, has met a controversial end as they shut down their operations recently. A blog post stated that the exchange has shut down all services and operations. The main reason for the demise of the exchange evidently is the regulatory uncertainty in India regarding cryptocurrencies but there are other players controlling the game.
The long ongoing clash between banks and crypto exchanges around the world has made the process of regulations very slow while the bankers, in an attempt to keep a centralized economical ecosystem, keep on taking hits at crypto, the easiest way for which is to target crypto exchanges.
After announcement, Koinex posted a farewell tweet:
We’ve to regretfully inform all our users that we’ve decided to permanently disable all digital assets trading services on all Koinex platforms from 2 PM IST today (27th June 2019). Please read the announcement blog from our co-founders here: https://t.co/AVaHppwgEJ
— Koinex (@koinexindia) June 27, 2019
Koinex has also fallen into the pit of competitive relations with banks and didn’t survive the fall. The reserve bank of India swiftly taking away decentralizing opportunities from the citizens issued a circular in April 2018, which ordered individuals and financial entities that dealt in crypto to stop their operations within three months. No solid reasons were given in the circular except for article numbers from the Indian constitution.
The banking ban as a result of the circular presented by RBI was also challenged in the court 14 months ago. The proceedings, however, are still going on to date. There’s even a proposal that pushes the agenda of banning cryptocurrencies and digital currencies due to which trading volumes in India, even on such a big exchange, dropped significantly.
Considering how businesses work, this regulatory unclarity and confusion within law-abiding citizens have put Koinex on roads of bankruptcy. Avoiding the consequences, the exchange respectfully took the decision with opportunities for people to cash out. The blog states:
Multiple delays by the government agencies in clarifying the regulatory framework for cryptocurrencies despite our pending writ petition in the Supreme Court of India, coupled with regular disruption in our operations, the final decision has been taken after duly considering all the latest developments in the crypto and blockchain industry in India.
The banks of India have also shown sheer unprofessionalism in dealing with employees of the digital exchange. No loans were provided for the exchange. Adding salt to the injury, the banks also halted their non-crypto activities, as the blog states:
“Even for non-crypto transactions like payment of salary, rent and purchase of equipment, our team members, service providers and vendors have had to answer questions from their respective banks — just because of an association with a digital assets exchange operator.”
The exchange has been in touch ever since they uploaded the announcement of their shut down. All the users are updated every few days regarding their funds and how they can withdraw their amounts following the shutdown of the applications. For example, Koinex tweeted:
Please note that in order to provide higher security for your funds, we have decided to suspend our mobile app during closure. Kindly access your account through a desktop or mobile web browser to withdraw your digital assets.
— Koinex (@koinexindia) June 27, 2019
After its inception, the exchange became India’s biggest exchange with trading volumes of $265 million and 40,000 new users recorded in the peak time in December. It also made its name into India’s fastest growing startups that also helped India incorporate digital currencies and blockchain but even this largest exchange fell prey to the centralization-decentralization war. The question still remains: if at government and state levels such regulatory hurdles keep halting crypto operations, how would the mass adoption, dreamt by many crypto enthusiasts, be achieved?