India has been a country in conflict with cryptocurrencies. The Reserve Bank of India, which is the central policymaker when it comes to economic matters, announced in April that no regulated financial body in the country would provide banking services to cryptocurrency-related organizations. It has since been observed that there is an increase in demand for P2P cryptocurrency trading platforms in the country.
What is a P2P Cryptocurrency Exchange?
Now that users can no longer use official banking instruments to make payments or to withdraw funds with crypto-businesses, traders are beginning to trade cryptocurrencies directly with each other over platforms known as P2P exchanges. These platforms usually act like an Escrow service where they take the money from a party and the cryptocurrencies from another and transfer to the concerned parties by charging a small fee from each party.
This escrow service ensures that the trades are fair and that there is no scam in the transaction. Considering that there is no other means left to trade cryptocurrencies in the country, P2P exchanges, such as the recently introduced Wazirx P2P exchange have been getting a good response in the country.
Just before the crypto-ban could come into effect, most major cryptocurrency exchanges expanded their offering to include several other cryptocurrencies. More importantly, these exchanges began to support crypto-to-crypto trading - i.e. the traders can now buy cryptocurrencies in exchange for other cryptocurrencies. This, coupled with the fact that P2P exchanges are on the rise are contributing to the recovery of crypto trade in India.
P2P Exchanges Opening Up in India
Looking at this as a business opportunity, a number of major international names such as Huobi have launched their P2P cryptocurrency trading platform in the country. Domestic players such as Wazirx, Koinex and Coindelta have also launched similar platforms. The platform launched by Wazirx has been particularly successful - with tens of thousands of users already signed up on the platform, which is just a month old. Wazirx CEO Nischal Shetty said in a statement to Bitcoin News that:
People love P2P…Everyone had their doubts whether P2P would work or not, the convenience etc…[But now] We’re seeing above 1 trade match every minute happening in P2P…we’re talking about peer-to-peer transactions at a rate of more than 1 per minute.
He further added that ever since P2P trading was introduced, the company got more sign-ups in two weeks than they had in the past two months. Orders on the exchange are automatically matched by the platform. This is an innovative effort on the part of Wazirx, which gives them the x-factor when it comes to P2P trading. Shetty further commented, saying:
“The P2P system has replaced the previous system of depositing fiat into Wazirx account and in return getting INR balance in your account. What happens now is that you deposit the fiat into another user’s account and get USDT in return…After you get USDT, you can trade in our USDT market in the regular way (non P2P).”
This is an interesting observation from the Indian cryptocurrency markets - and a model that can be replicated in other nations going through a similar kind of a problem.