India: Major banks suspended major Bitcoin exchanges
According to the Indian Economic Times, some Indian banks, including the National Bank of India, suspended the trading of their local bitcoin exchanges, including the top ten exchanges, who found that they had suspicious transactions.
The banks also demanded that the Bitcoin Exchange provide additional guarantees on its borrowings, “banks have been asking for an extra one-to-one guarantee since last month.” Moreover, they have taken measures to limit withdrawals of the still working minority accounts.
Indian bitcoin trading in the basic non-regulatory status. About a month ago, Indian tax authorities conducted an on-site inspection of the Bitcoin Exchange to investigate the identities and records of Bitcoin users and traders.
Tax officials found that some exchanges did not provide financial data, they have never paid sales tax and value-added tax. Other exchanges submit very suspicious data. Tax officials also said the information they provided contradicted each other.
In the eyes of a tax official who participated in the audit of the Bitcoin Exchange, there were two major problems with these virtual currency exchanges:
1, the total income of the buyer and the seller for the exchange’s total revenue.
In many cases, the exchange buys and sells virtual currency on its own platform.
Although India did not require the shutdown of the Bitcoin Exchange, as China does, a recent Ministry of Finance official described the virtual currency as a “Ponzi scheme.”
Currently, various bitcoin exchanges in India are waiting for further clarification of government policies. Many people believe that if the government really wants to close down, they have already acted. Some people think that the authorities may emulate other developed countries, such as Britain, not China.
Sathvik Vishwanath, Co-Founder and CEO of Unocoin, said: “I do not think that what happens in the rest of Asia will spread to India.”
The Bitcoin Exchange of India wants to clarify the authorities’ definition of Bitcoin. Once a virtual currency, such as Bitcoin, is identified as currency, the exchange does not need to pay taxes. If they are classified as commodities, they have to pay 18% of the tax. If these virtual currency transactions are defined as a service, they are subject to a 12% tax.
If the 18% tax on goods to pay tax, bitcoin transactions need to pay the total amount of tax or 1.13 billion US dollars.
According to tax officials, the top ten bitcoin exchanges, including Zebpay, Unocoin, CoinSecure, and Btcxindia, may have annual aggregated revenues of up to Rs400 billion ($6.3 billion).
Insiders said that many bitcoin exchanges have profit margins approaching 20%, with profits mainly coming from trading premiums, bid-ask spreads and earnings from exchange-traded transactions.