Indian cryptocurrency exchanges re-introduce fiat via P2P loophole
Bans are easier said than done.
India's crypto crackdown, announced in April, took the form of a banking ban for cryptocurrency exchanges. Exchanges were given three months, which have long since elapsed, to cancel their banking arrangements and to give back all their customers' INR (Indian rupees).
The crackdown, spearheaded by the Reserve Bank of India, kicked up some legal challenges from exchanges that were set to culminate in a date at the Supreme Court. But the prescribed decision date slid past without a resolution since the Supreme Court of India kept pushing back the hearing date.
Several Indian cryptocurrency exchanges seem to have been anticipating the possibility of the decision going either way, and almost as soon as the court date arrived, a few started unveiling alternative peer-to-peer INR banking systems to let their customers pay with fiat.
Where there's a will, there's a way
At least three cryptocurrency exchanges in India have recently announced the return of INR deposits and withdrawal support, news.Bitcoin.com reports, crackdown notwithstanding.
In all cases, it seems to use a peer-to-peer payment system, bypassing the banks which are responsible for policing the ban.
On 12 September, Koinex announced the return of INR deposits and withdrawals, saying:
"We are happy to announce the revival of INR in the crypto universe through a new peer-to-peer deposit and withdrawal mechanism for INR transactions…Just like the old times, users will be able to deposit and withdraw funds directly from their INR wallets."
Coindelta made the same announcement weeks before, saying the same thing on 31 August.
"We have resumed back the INR deposits and withdrawals on Coindelta. Not only this, your old favourite INR markets are back where you can trade with your INR," it declared. A third exchange, Giottus, reportedly did the same.
The growth of peer-to-peer trading is a natural response to severed banking connections, as seen in many countries around the world. In India, peer-to-peer exchanges – where individuals simply buy and sell directly from each other, no bank required – might end up doing quite well for themselves.
"We're seeing our trading volumes increasing every day," said P2P exchange WazirX.
P2P exchange Instashift went into more specifics.
"Since the last set of RBI related developments in the past couple of months, we have continued to see strong 20-25% growth in trading volumes month on month over the last 2 quarters of our operation," said CEO Rahul Chitale to news.Bitcoin.com.
It's easy to throw around the word ban, but it turns out it's much harder to enforce it.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.