The recent move by the Reserve Bank of India to ban financial companies from transacting crypto-related businesses will definitely come with several consequences. The ban has forced crypto exchanges to look for alternative ways to remain in business. This has led to the emergency of P2P and Crypto-only trade.
The decision to ban crypto businesses
Recently the situation has been worsening in India. In April, the country’s central bank issued a directive banning all financial institutions from transacting with crypto exchanges. The bank went ahead and issued a deadline on which all financial institutions should clear their business.
In its ruling, the Supreme Court upheld the ban. This is a very difficult moment especially for cryptocurrency exchanges. Some companies are opting for crypto-to-crypto trading. Several platforms like Unocoin and ZebPay are currently not facilitating any form of fiat currency trading.
This approach may however not be applicable to all companies. The ban issued by the RBI limits the number and type of services that can be offered by cryptocurrency firms. The ban also prevents any form of innovation in sector. Many companies have been forced to scale down their client base, which is one of the effects that came with the new directive.
P2P Trading Remains an Option
Centralized digital currency exchanges offer a lot of convenience. Additionally, they are also affected by the new regulatory requirements. In this regards, peer-to-peer trading has become an appealing option for many exchanges. This method helps to get rid of middlemen because there is need to take control of user funds.
P2P trading is not without challenges. First, is very risky because it comes with high chances of theft. There are a lot of risks that come with online trade. Many P2P platforms in India are working to boost their security measures. These include introducing safer payment methods and KYC procedures.
Escrow services are expected to add more legitimacy in P2P trading. This may imply that operators of P2P platforms will take steps necessary to ensure that the money is safe until the buyer and seller agree to the terms of trade.