India’s largest cryptocurrency exchange is shutting down. Zebpay announced they will stop their operation by 4 p.m. on Friday Sept. 28 with a cancellation of unexecuted orders and non-acceptance of new orders. It cites the curb on bank accounts by the country’s central bank, RBI, as hindering their ability – as well as their customers’ – to transact business meaningfully.

We are stopping our exchange. At 4 PM today, we will cancel unexecuted orders & credit your coins to your Zebpay wallet. No new orders will be accepted. The Zebpay wallet will work even after the exchange stops.

Read more: https://t.co/W8ygzPIYz1 pic.twitter.com/tPWCnyu7Yu

— zebpay (@zebpay) September 28, 2018

It refers to a government crackdown in April that strained crypto exchanges’ relationship with lenders. India’s cryptocurrency exchanges are still in a legal battle with the RBI and other government agencies over the issue. Zebpay’s wallet is expected to still work even after the exchange stops. The exchange is credited for bringing cryptocurrencies to many Indians some of whom complain about the unexpected notice of closure.

Implication
What the shutdown implies is that other cryptocurrency exchanges in the country could follow suit – though there are no reports yet that exchanges like Koinex, BitBNS and WazirX are planning a shutdown. If a general shutdown happens, it will hamper the flow of crypto-related activities in the country and, in a way, slow down the pace of crypto use in India.

On the other hand, the situation may drive users’ traffic to the world of peer-to-peer exchanges such as Bisq and/or over the counter platforms like LocalBitcoins.com or Paxful. In fact, there are suggestions that Zebpay may return as a P2P exchange but the operators are yet to make such a claim.

P2P exchanges are still uncommon in parts of India and Asia as a whole but OTC transactions are not. Depending on how the shutdowns spread through exchanges in the country and how the impact is felt in the activities of exchanges that survive, there could be a rise in OTC activities. How India’s financial environment develops will also reflect on the way people in the country sway in the direction of crypto marketplaces.

According to latest figures from Coin.Dance, weekly transactions on the LocalBitcoins platform in India show the past three weeks have been trailing the November-December 2017 pattern with more than R94 mln each week. Though still tiny, India has its highest weekly transaction on the Paxful platform recorded this month. These figures will rise if more users flood the P2P market.