SBI, four more banks suspend accounts of major Bitcoin exchanges in India

In India, where Bitcoin is largely unregulated and has not been recognised as a legal tender yet, the Narendra Modi government has some bad news for Indians who are dreaming of making a quick buck through the crypto currency.In the latest development, the top banks of the country including State Bank of India (SBI), HDFC Bank, Axis Bank, ICICI Bank and YES Bank have suspended some accounts of major Bitcoin exchanges in India on suspicion of dubious transactions.The legal action has been initiated against top ten cryptocurrency exchanges in the country, including - Zebpay, Unocoin, CoinSecure and BtcxIndia, reported The Economic Times.The total estimated revenue of these exchanges in India stands at Rs 400 billion with approximately 20 per cent commissions made by these exchanges, according to the news report.The top lenders froze accounts of major Bitcoin exchanges after banks discovered that they were used for reasons other than those stated when they were opened.These banks have asked for additional collateral with 1:1 ratio from the promoters of these exchanges on their borrowings and have capped cash withdrawals from the few accounts that are still functioning. After persistent warnings from the Government of India and Reserve Bank of India (RBI), the banks have been scrutinising transactions of Bitcoin exchanges.In December last year, the income tax department had also issued notices to those dealing in cryptocurrency and issued repeated warnings against digital currency investments.

A nationwide survey showed that more than $3.5 billion worth transactions were conducted over a seventeen-month period, according to The Economic Times."The banks have not contacted the company or the promoters regarding the actions you have mentioned," said Sathvik Vishwanath, promoter of Unocoin.On Friday, the income tax department sent notices to thousands of cryptocurrency investors across the country, seeking additional details on the money invested in the virtual currency during the government’s demonetisation exercise. Among 28 questions in total, the income tax department has sought details on “investment or sales of bitcoins and other cryptocurrencies in India and abroad during 8 November-31 December 2016,” said a notice to cryptocurrency investors on December 20. A cryptocurrency, such as bitcoin, is a virtual currency created and stored electronically using the blockchain technology.“We have issued notices to cryptocurrency investors in cases where their investment in not in line with the income declared in their returns,” a Central Board of Direct Taxes (CBDT) spokesperson confirmed.

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