As the going gets stressful, cryptocurrency industry is toughening itself by adapting to the evolving environment. After the denial of Supreme Court (SC) to offer interim relief, virtual currency players have moved to new operating models like peer-to-peer transfers or crypto-to-crypto trading to ensure continuity of their business and offer assurances to their users.
Nischal Shetty, founder and CEO of WazirX, told DNA Money that anticipating the withdrawal of banking services, his exchange had already begun working on an alternative model for entry and exit from cryptocurrency trading a week back.
A peer-to-peer model does not require a bank account and entails direct cash transfer between the sellers and buyers with exchanges taking the responsibility of transferring the cryptocurrency.
“A week back, we announced an alternative to the existing model to tackle the problem that people would face on stoppage of services from banks. It is the peer-to-peer model. For this, we don’t need to have a bank account to provide services for cash-in and cash-out of cryptocurrencies. Here, you transfer your money to the seller directly using any fine tech unified payment interface (FT UPI). Once the buyer has done the cash transfer and the seller confirms to us that he has received the money from the buyer, we transfer the crypto to his WazirX wallet. That is our responsibility,” he said.
Shetty saw SC denial of interim relief by striking down the industry plea to extend the Reserve Bank of India (RBI) deadline of July 6 as a “minor bump in the road”.
On April 6, the central bank came out with circular directing banks to withdraw all services being offered to cryptocurrency industry in three months. The shift to an operating model would increase the time for cash-in and cash-out of cryptocurrencies.
“Through a bank account, it used to take five minutes to 10 minutes for an entry into or exit from cryptocurrencies. It may now take an hour or two or maybe less depending on the demand and supply. If you look at it in perspective, it still is faster than you cashing in and out of equity market today; which takes longer. It takes a day or two for the money to reach your bank or for you to take delivery of your assets (in stocks),” said Shetty.
Ashish Singhal, co-found & CEO of CoinSwitch.com, said the other model that will now gain popularity is the crypto-to-crypto trading, where users convert one virtual currency to another.