In anticipation of progressing legal action being taken against cryptocurrency commerce in India, the nation’s top exchange Zebpay issued a warning to customers stating that their rupee withdrawals could be blocked in the near future, depending on the policies of the particular bank investors were planning on withdrawing to. While this was not a notice of any imminent action per se, it nonetheless caused a significant localized dip in several currencies including market capitalization leaders bitcoin and ether.
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Possible Rupee Woes Cause Zebpay Panic
In the wake of Zebpay’s notice, bitcoin and ether respectively experienced 14 percent and 16 percent price drops, acutely falling to $5504 USD (BTC) and $430 (ETH) on the exchange. By comparison, the values at the larger and more global exchange Bitfinex at the time were $6652 for BTC and $514 for ETH — quite a significant price spread.
Bitcoin has since rebounded to just over $6000 on Zebpay, while falling to $6330 on Bitfinex, the aforementioned spread being closed. The Ethereum gap has also closed, now sitting at $457 on Zebpay and $488 on Bitfinex.
Indian Investors Out of Luck?
The drop was not spurred by any immediate change in policy, but rather by a warning from Zebpay about what could be coming in the near future. Earlier this year on April 6th, India’s central bank, the Reserve Bank of India (RBI), ordered all banks and financial institutions to cease all dealings with cryptocurrency businesses across the board. Zebpay has decided to challenge this decision with the Supreme Court of India, noting to its community:
“This is a VERY IMPORTANT announcement in light of the recent Reserve Bank of India circular: DBR.No.BP.BC.104 /08.13.102/2017-18 dated April 6, 2018.
Our industry has approached the Supreme Court of India to challenge the circular, as we feel it is counterproductive, and against the interest of citizens. As a responsible corporation, we regard customer-protection and market-integrity as our primary objectives. In light of that, please note that if Zebpay bank accounts are disrupted, rupee deposits and withdrawals will become impossible. This can cause discontinuation of crypto trade based on rupees, or at least cause significant price movements.”
Backlash and Pending Appeals
The Reserve Bank of India’s April action did not initiate a blanket ban on all cryptocurrency activity in the country, though further restrictions could be on the horizon if the move’s any indication. Despite an admission by the RBI that no significant research was done on the matter, Indian investors must nonetheless prepare accordingly in their dealings with national exchanges in the coming weeks.
It’s against this shaky backdrop that this latest rupee development will no doubt be viewed by many observers as yet another example of the effect “FUD” (fear, uncertainty, and doubt) can have on the market. While there have been no actual new developments, Zebpay’s warning announcement was still able to result in massive price plummeting on a major exchange, which resonates into the wider cryptoeconomy, even if temporarily. Another major example of “FUD” occurred earlier this year in January when several major news outlets reported South Korea planned on banning all cryptocurrency trading. In reality, South Korea was only considering implementing regulations, which still have yet to comprehensively come into place.
The Supreme Court of India plans to hear multiple appeals to the RBI’s regulatory decision on July 20th. Banks and financial institutions, however, have been given a July 6th deadline to cease all operations and dealings involving cryptocurrency, giving Zebpay’s warning to users fuller legitimacy despite not specifying specific dates and times.
What’s your take? Do you think the RBI or cryptocurrency exchanges will win out in India? Sound off in the comments below.
Image via Zebpay, Pixabay
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