Following the Reserve Bank of India’s (RBI) decision to ban virtual currency, local crypto traders have already found a way to circumvent it: they are introducing a peer-to-peer model which will allow digital currency trade regardless of what the government decides, writes businesstoday.in
Back in April, the RBI issued a directive that set the 5th of July as the deadline for traders to cease all virtual currency activities, including trading operations, account registering, giving loans against virtual tokens, accepting them as collateral, and so on. But the regulators have nothing to celebrate, as the Indian traders are already proving that banning online activities in the 21st century is futile at best.
Crypto exchanges, like WazirX and Koinex Loop, have already come up with a solution for all the traders inside the country — peer-to-peer (P2P) cryptocurrency transfers which will allow avoiding additional intermediaries. Nischal Shetty, WazirX CEO, tweeted: “WazirX P2P is coming soon. Don’t worry at all. You can transfer money directly to each other and we will help with the crypto transfers and trading. India will be part of the blockchain revolution.”
He then added: “Today we reveal the most legal way to deal with cryptos in India after RBI restriction comes into effect. Do share it and help spread the word!”
Shetty explains how the P2P model works, “the buyer and seller can deal with each other directly while WazirX acts as an escrow account for holding the cryptos during the transaction so that neither party cheats the other.”
He then elaborates on how this method will function. Firstly, the user who is willing to buy crypto with the rupee (Indian currency) will be connected to another person who is selling it for the rupee. Afterwards, the seller will “have to deposit the virtual currency with the exchange” and the buyer will simply purchase it. Once the buy-sell contract is confirmed, the buyer receives P2P.
The company also addresses the ubiquitous concern these days — safety. Particularly, it promises that the P2P method is reliable, as “We verify the KYC details of every user before allowing them to trade on WazirX, and keep a record of each and every transaction that occurs on our exchange. Hence, you don’t need to worry about the legitimacy of the person you’re transacting with — it’s all taken care of! ”
Concurrently, a number of Indian banks are adhering to the ban and have already notified their customers of the changes. Hence Kotak Bank said: “We here at Kotak Mahindra Bank request you not to make any transaction involving virtual currencies from your bank account. However, if done so, under regulatory guidelines, we would need to close your account without further intimation.”
Judging by the previous statements made by the Indian Finance Ministry, the country has a serious problem with the cryptocurrency market. Back in December, it stated that VCs are neither cryptocurrencies nor coins. One of the reasons why the authorities believe so is because a coin is intangible and therefore does not exist — quite an interesting logic which begs the question what if BTC will be issued in the form of copper coins? Will India start recognizing it then?
Yet while some states are prone to banning crypto, like China, others are looking into ways of legalizing it and regulating it. And they are what one would call a motley crew ranging from Western to democracies, like Switzerland to more authoritarian states like Uzbekistan and Russia.