Crypto Exchanges in India Explore P2P Payments to Bypass UPI

Following the NPCI statement regarding Unified Payments Interface (UPI), some Indian crypto exchanges have reverted to peer-to-peer (P2P) transactions.

Coinbase was among the first to suspend UPI.

When a user at the crypto exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term wishes to buy a cryptocurrency, the system will connect the user directly to the seller. The buyer pays the seller and in return the seller transfers the cryptocurrency to the buyer's wallet.

In the above manner the transactions take place between 2 individuals, which bypasses any restrictions imposed on the cryptocurrency exchange.

The P2P structure is similar to what Paxful has been offering for several years.

An official from one of the Indian crypto exchanges told local media that P2P crypto transactions are not violating the law: “This is not how an exchange should be functioning. It’s certainly less efficient. But, apparently there is no violation of any regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term or law. It’s a simple money transfer from A to B over net banking or IMPS or NEFT, and it’s happening outside the exchange.”

Bank Transfers to the Exchange

Other crypto exchanges have adopted a different method. The client makes a bank transfer directly to a company's bank accounts. Once the funds are received the exchange adds credit to the client's wallet.

A lawyer has warned that the above approach may require regulatory approval and explains why.

“If it’s perceived that by directly accepting funds from buyers, an exchange is offering some kind of a wallet facility to the trader, there would be regulatory issues.

"If an exchange accepts money to sell crypto, considering it as a commodity, or acts as an intermediary engaged in collection of funds, it’s one thing.

"But, if it is receiving funds from thousands of traders and holding it till trades are executed, the question is would it be construed as deposits or wallet facility. If so, it may require regulatory approval."

source: ET

Some Indian crypto investors began shifting towards exchanges outside.