Earlier this year, the Reserve Bank of India issued a notice that all regulated entities should stop dealing with cryptocurrency exchanges. This essentially means banks will stop deposits and withdrawals of Indian Rupee (INR) to exchange accounts. It created an environment of pessimism among Indian investor and trading community. This ruling was however challenged by multiple parties in courts as ‘unconstitutional’.
Withdrawal of Banking Support
While the Supreme Court has agreed to hear this petition on July 3rd, the deadline for withdrawal of banking is July 5th. One of India’s largest exchange, Zebpay shot an email notifying customers that they need to withdraw their funds before that and that there ‘might’ be a possibility that INR withdrawals are restricted by the banks. This created a lot of FUD and the price fell by almost $1500 in a matter of hours. Later a few other exchanges sent mild versions of such emails while a couple of exchanges outright declared that they are working on a Plan B to continue trading in Indian Rupees. Arbitrage trades later led to price stabilising again while Crypto groups on Telegram and Whatsapp were abuzz with advice on how to continue trading or transfer funds to international exchanges.
The Solution – P2P
While platforms like Localbitcoins already existed, Indian investors and traders are largely accustomed to local platforms. So instead of users moving to sites like LocalBitcoins, exchanges like WazirX have announced their plans to start P2P trading in case the court decision is not in their favor and the court supports the central banker.
While going P2P, these exchanges will still follow the KYC norms and report the transactions to tax authorities as required. P2P does not mean illegal trading. This is just a means of cashing in and out with INR pairing. Crypto-to-crypto trading is bound to go on as usual.
Regulation
While the central banker is adamant about withdrawal of support, they also admitted to the court that they haven’t done any research on the issue.
While there is widespread concern about withdrawals, there is also hope as Mr. Subhash Chandra Garg, who is heading a ten member committee on their draft recommendations relating to regulation in India has indicated that they are going to recommend regulation of this space. “We are fairly close to developing a template that might be in the best interests of our country. We have moved pretty far in this regard, and we have prepared a draft that entails what parts of this businesses should be banned and what should be preserved. This should be discussed by the first week of July and we should wrap this up within in the first fortnight of July”, Garg said in an interview.
What do Indian Cryptocurrency Enthusiasts feel about P2P Exchanges?
Dr. Tausif Malik-
A social entrepreneur and the treasurer for Democrats Abroad India is working towards making Pune, India the hub of Blockchain. He has collaborated with the Dalit Indian Chamber of Commerce and Industry (DICCI) to launch the very first Bitcoin mining program across 30 cities in India.
Dr Tausif Malik has founded MahaBFIC (Maharashtra’s - Blockchain, Fintech, IPCO, Cryptocurrency) which is a platform for promoting Blockchain technology and investments in the state of Maharashtra in India. The MahaBFIC conference is held on August 23rd and August 24th and will pave way to India becoming a Blockchain capital.
"P2p exchange is not only the best way when there is a restriction on cryptocurrencies, but it also decrease the transaction cost which could be the best way to increase business between citizens to replacing fiat.”
Bhaskar Negi
Bhaskar is a 19 year old, young and dynamic Director of Operations at the MahaBFIC Blockchain Conference in Pune.
"P2p exchanges is going to stay as it’s the future. It eliminates middlemen is far more secured when compared to other formats of exchanges. "
Pareen Lathia
Pareen is an entrepreneur, writer & traveler. He writes for leading publications on blockchain, crypto, travel and life. He also runs an Artists' hostel in Goa.
"P2P exchanges are operating in a grey area right now. I expect a crackdown on the OTC market unless 20th July verdict is favourable. Users and exchanges have to be very careful while using P2P"