P2P Crypto Trading - Smart Move By Indian Exchanges Against RBI Ban

With the impending banking ban by the RBI, Reserve Bank of India set to take effect on 5th July this year, cryptocurrency exchanges in India are scrambling to find banking alternatives. Two Indian exchanges have come up with the "most legal way to buy and sell cryptos in the country after the RBI ban" and that is P2P crypto transfer service.
This will allow users to continue trading “without getting those warning emails from their bank!”.

Firstly let's understand how Peer-to-Peer (P2P) works:

These ‘decentralized’ exchanges are operated and maintained exclusively by software.They allow the participants of the market to trade directly with each other without any trusted third party to process all trades.

The crypto exchanges serve as intermediaries between their customers and make a profit by collecting fees. Conversely, the interactions between counterparties on peer-to-peer exchanges are directed exclusively by pre-programmed software, with no requirement for human middlemen.

Indian Exchanges

Wazirx and Koinex are the 2 Indian exchanges to have announced to launch P2P crypto transfer services.

Wazirx’s P2P Service

WazirX will collect crypto deposits from the seller and escrows it for safekeeping during the transaction. The buyer makes a payment to the seller in Indian Rupees, following which the exchange releases the digital currencies to the buyer.The exchange would verify the KYC details of every user before allowing them to trade on the platform, and keep a record of each and every transaction that occurs on the exchange.

Launched in March this year, Wazirx currently supports the trading of 37 cryptocurrencies against INR and 17 BTC trading pairs. It has managed to form a database of over 1,00,000 users in a short span of time.

Koinex’s P2P Service

Another Indian crypto exchange, Koinex, has also announced the launch of its new product Loop, “a peer-to-peer token transaction netwok”. The new service will be integrated into the Koinex web platform and the mobile app.

Koinex Loop will enable users transacting with other KYC-verified peers on the platform, make and receive payments directly from peers and strategise their trading activity better.

In conjunction with the crypto/crypto trading corridors on Koinex, the peer-to-peer transaction network will allow all users to exchange their fiat currency into a digital asset and vice versa without compromising on the seamless experience that they are used to.

This is the first time that a P2P trading network has been introduced by any exchange in India, whilst even globally there are very few exchanges who have the technical scale and capability to efficiently run such a network.

Indeed P2P crypto trading has its own downsides, the trade times will be longer due to the manner in which the trades are conducted, lower liquidity as they are not much in demand. Having say that, to the Indian users, it definitely seems like a relief from RBI ban set to take effect from 5 July. Atleast the legit and verified investments made by Indian investors’ won't turn into dead assets.

I am yet hopeful that the authorities will acknowledge the impact crypto has on global economies and will work closely with private players to regulate this space instead of simply banning cryptocurrency.

What do you think? Let me know in comments