India’s crypto exchanges are continuously looking for ways to get over government and banking regulations in order to meet the country’s growing demand for digital commodities. As part of an ongoing effort to circumvent bank and payment company limitations, a number of Indian crypto exchanges are supporting peer-to-peer transfers.
When the exchange gets a buy order, it immediately connects the buyer with the seller. The buyer can then send money to the seller through a bank or a payment mechanism, and the seller will transfer the cryptocurrency from their exchange wallet to the buyer’s wallet. There are no transfers from payment systems or banks to the exchange in this manner.
Suspension of Cryptocurrency Payments in India
The decision was made in response to recent restrictions imposed in India on payment platforms.
This is not the way an exchange should work. It is unquestionably inefficient. However, it appears that no regulation or law has been broken. It’s just a straightforward money transfer from point A to point B,” says the narrator.
Fiat on-ramps and off-ramps between the client and the exchange are normally handled by third-party payment processors. The Reserve Bank of India, on the other hand, has issued several warnings to them regarding payments to crypto exchanges.
Coinbase was forced to suspend its payments partner just days after launching in India owing to pressure from the government bank. The exchange had planned to launch with the widely used Unified Payments Interface (UPI) service, but state financial officials put a stop to it, citing that they were unaware of any exchanges that used UPI.
CoinSwitch Kuber, an Indian exchange, likewise banned crypto deposits and withdrawals using its payments network last week. As banks expand their influence on digital assets, this has left Indians with a diminishing number of options for fiat to exchange transactions.
The Bankers’ Avoidance
Some exchanges have used a variety of payment methods, including receiving monies directly from customers in their bank accounts. The exchange credits the user’s crypto wallet when the deposit has been made, allowing them to purchase digital assets.
This strategy could be troublesome for trades, according to a lawyer:
There would be regulatory concerns if it was thought that by directly receiving payments from buyers, an exchange was providing a wallet service to the trader.
Investors and merchants are already moving funds outside to trade on international exchanges. However, India’s overreaching banking industry places limits on this, necessitating greater avoidance.
Also Read: Indian Government: Disclosed that 11 Crypto Exchanges have been Examined for tax Dodging and that $13M has been Retrieved
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