India’s Paytm allegedly freezing crypto trader’s accounts

Customers have come forward with claims that the commerce platform has been freezing the bank accounts of crypto traders

It is revealed that Paytm — India’s largest mobile commerce platform — has been freezing the bank accounts of users suspected of crypto trading, even though cryptocurrencies have been legalised in the country.

While India does not yet have a legal framework for cryptocurrencies, the government has reassured its citizens that a crypto bill is already awaiting approval.

Paytm Payments Bank has over 450 million registered users. The company was founded by Vijay Shekhar Sharma and its brand is owned by One97 Communications.

Coin Crunch, an Indian crypto news outlet, reported on Monday that, “Many users are reporting Paytm is freezing bank accounts of Paytm payments bank account holders with suspicion of crypto trading”.

The outlet explained that Paytm provides INR wallet and INR banking services.

“So P2P, or spot, users can use this bank account to receive money or to send fiat to deposit in exchanges. And those bank accounts are being frozen.”

Other banks have also been reported to have reservations providing services to clients who participate in trading cryptocurrencies. Last month, customers of the Axis Bank claimed the bank called to ask whether they were using their accounts for crypto trading. In addition, the bank also informed customers it would be blocking accounts used for this purpose.

Some customers also reported being asked to sign a declaration form confirming they, “do not deal in any type of virtual currency transactions” through their accounts at the bank.

Prior to the Supreme Court of India’s move to reverse the Reserve Bank of India’s (RBI) circular in March, local banks were monitoring their accounts and closing those they suspected were being used for crypto trading.

The RBI’s circular banned banks from providing services to clients and businesses that dealt in cryptocurrencies.

Crypto enthusiasts still struggled to set up bank accounts even after the ban was lifted, with banks claiming they were waiting for further instructions from the central bank.

While the RBI has clarified multiple times that cryptocurrencies are not banned in the country and it is not illegal to operate or transact with crypto exchanges, traders, or businesses, Coin Crunch has also noted that banks reserve the right to act in their own interests.

Furthermore, the Indian Government is still considering a draft bill to ban cryptocurrencies. The bill was drafted by an inter-ministerial committee (IMC), formerly headed by the previous Secretary for Finance and Economic Affairs, Subhash Chandra Garg.

The local crypto industry believes the government may re-examine the bill, as the industry has grown considerably since it was submitted.