A big blow to India cryptocurrency exchanges came in April, when the Reserve Bank of India (RBI) de-authorized cryptocurrency transactions in the country.
Keeping in mind the ban, many India’s cryptocurrency exchanges are reinvented their businesses to escape the ban and survive. A number of platforms, including Zebpay, Unocoin, WazirX, and Koinex, have already shifted to crypto-to-crypto trade, wherein customers can exchange units of one digital currency for another at predetermined rates. The bourses earn commissions on these transactions.
But the customers are to these platforms are now limited, significantly the exchanges’ customer pool. First-time investors will have to rely on peer-to-peer (P2P) exchanges that connect individual buyers and sellers. Typically, the challenge with these kind of cryptocurrency exchanges has been the high level of risk involved in trading with unknown investors.
Shubham Yadav, co-founder of Coindelta, one the famous Indian cryptocurrency exchanges.
“Earlier, a lot of these transactions were taken offline and completed, which led to a possibility of being robbed. Or even when it was online, you didn’t know who you were dealing with and there were chances that the deal could go awry.”
Now to fill in the gaps, firms will be implementing improved know-your-customer (KYC) based norms, allowing only online bank account transfers, and withholding the buyer and seller’s identities, added Yadav, who will be launching P2P trade on his exchange later in July.
Nischal Shetty, founder and CEO of WazirX, another Indian cryptocurrency exchange that launched P2P trade on its platform last month.
“If you are a seller, we will not release your crypto to the buyer until you confirm the receipt of money. We are also building a robust dispute-resolution engine to detect any dispute between buyer and seller,”
Additionally, these cryptocurrency exchanges have also come forward and challenged the RBI’s order in the supreme court and the next hearing is due on July 20. Despite the court not staying the ban earlier this week, the exchanges are hopeful.
The new Indian regulatory framework for cryptocurrencies is also likely to be presented in the first half of July, according to a recent statement by Subhash Chandra Garg, Secretary of the Department of Economic Affairs at the Ministry of Finance.