India takes action! Major banks suspend some accounts of major Bitcoin exchanges

Following China, India has also begun to strictly regulate Bitcoin transactions.

According to the Economic Times of India, some Indian banks, including the State Bank of India, have suspended transactions on local Bitcoin exchange accounts, including the top ten exchanges, as they believe there are suspicious transactions in these accounts.

The banks also asked bitcoin exchanges to provide additional collateral for their loans, “as they have been asking for additional one-to-one collateral since last month,” and they restricted withdrawals from the few accounts that were still operating.

About a month ago, India’s tax authorities launched on-site inspections of bitcoin exchanges in a bid to check the identities and records of bitcoin users and traders in largely unregulated India.

Tax officials found that some exchanges did not provide financial data and never paid sales tax and value-added tax. Other exchanges submitted very suspicious data. Tax officials also said that the information they provided was inconsistent.

According to a tax official who participated in the audit of Bitcoin exchanges, there are two main problems with these virtual currency exchanges:

1. Add up the revenues of buyers and sellers to get the total revenue of the exchange.

2. In many cases, exchanges buy and sell virtual currencies on their own platforms.

Although India has not required Bitcoin exchanges to shut down like China, an Indian Finance Ministry official recently called the virtual currency a "Ponzi scheme."

Currently, various Indian bitcoin exchanges are waiting for further clarity from the government. Many believe that if the government really wanted to shut down, they would have done so long ago. Some believe that the authorities may follow the example of other developed countries, such as the United Kingdom, rather than China.

“I don’t think what’s happening in other parts of Asia will spill over into India,” said Sathvik Vishwanath, co-founder and CEO of Unocoin.

Indian bitcoin exchanges want to clarify the authorities' definition of bitcoin. Once virtual currencies such as bitcoin are recognized as currencies, exchanges do not need to pay taxes. If they are classified as goods, they will need to pay 18% tax. If these virtual currency transactions are defined as services, they will be subject to 12% tax.

If the commodity tax is paid according to 18%, the total tax that Bitcoin exchanges need to pay may reach 1.13 billion US dollars.

The top 10 bitcoin exchanges, including Zebpay, Unocoin, CoinSecure and BTCXindia, could have a combined annual revenue of 40,000 crore rupees ($6.3 billion), according to tax officials.

According to people familiar with the matter, the profit margins of many Bitcoin exchanges are close to 20%, with profits mainly coming from transaction premiums, bid-ask spreads and profits from exchanges participating in transactions.