The cryptocurrency trade has officially come to an end in India after a ban enforced by Reserve Bank of India. All the financial institutions have been issued a notice to prohibit trade of virtual currency. There was a deadline of 3 months to end all the trades which were going on. It finally came to an end on July 5th along with the Supreme Court’s decision which came in favor of RBI. However, the exchanges have come forward with different methods to keep the trade going on.
According to Business Today, the cryptocurrency exchanges announced to use peer-to-peer (P2P) exchange model for operating their business. However, this is completely a circumvention of the bank’s official notice. Exchanges like Koinex Loop and WazirX have begun to work on their systems to facilitate their clients with P2P using usual banking channels.
How Does It Operate?
The new transaction models were kicked in right a week before the deadline given by the RBI. WazirX CEO Nischal Shetty stated that P2P transfer model will enable the customers to continue buying and selling of digital currency. In addition to this, the account of WazirX acts has become escrow for keeping crypto at the time of transactions. It has been done in order to avoid cheating and frauds.
He further mentioned that, the exchange will connect to the customer interested in buying crypto against INR with the one who is willing to sell them. Seller then will deposit the cryptocurrency in the exchange and the buyer will pay INR to the seller directly. The exchange will release the virtual currency right after seller receives his payment.
Although, it has been clearly indicated by RBI that no entities are allowed to regulate and facilitate cryptocurrency trade. This includes trading, settling, registering, maintaining accounts, providing loan against crypto, using them as collateral and opening of new accounts for crypto trade. The ministry has already made it clear that virtual currency is not considered as legal in India as of now. Also, no licenses have been issued by the government to any exchange for such trade.
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