India’s cryptocurrency industry has seen some awkward developments. The Reserve Bank of India prevents banks from offering services to Bitcoin firms. Even so, domestic exchanges are coming up with ways to survive this troublesome development. Crypto-only and P2P trading are two valid business models at this stage.
The Reserve Bank of India Decision
Over the past few months, the situation in India has gone from bad to worse. Back in April, the RBI made it clear they do not want banks to conduct any business with cryptocurrency firms. A deadline was proposed for all financial institutions to adhere to. As of July 5th, Bitcoin companies can no longer access financial services in the country.
India’s Supreme Court recently enforced this harsh decision. For cryptocurrency exchanges, it is a very troublesome development which needs to be addressed. Some companies pivoted their business model to focus on crypto-to-crypto trading solely. No fiat currency trading is allowed on platforms such as ZebPay and Unocoin at this time. This method still allows exchanges to collect revenue and commissions.
This method of approach will not work for all companies. The decision by the RBI puts a strict limit on services offered by cryptocurrency firms. It also stifles innovation first and foremost. Companies are forced to wind down their client pool, which is another bothersome side effect of this regulatory development. This does, however, create new opportunities for peer-to-peer trading.
P2P Trading Remains an Option
Centralized cryptocurrency exchanges offer a high degree of convenience. At the same time, they are also subject to these regulatory whims. Peer-to-peer trading options are a lot more appealing in this regard. It removes the middlemen from the equation as there is no one taking control of user funds.
P2P Bitcoin trading is not without flaws and concerns. Dealing with such trades is risky, as chances of theft are relatively high. Online trades still pose risks as deals can go awry at any given time. Various P2P platforms throughout India will beef up their security measures, such as introducing KYC procedures and safer payment methods.
Introducing escrow services will bring more legitimacy to P2P trading. This means platform operators will ensure money is kept safe until buyer and seller are satisfied with the trade in question. There’s also the ongoing challenge regarding the RBI’s decision, which will have its next hearing on July 20th. This is not the last development regarding India’s cryptocurrency ecosystem.
What do you think about exchanges turning to crypto-only trading as well as rising P2P trading? Let us know in the comments below.
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