A lack of predictable banking services provided by banks is causing Indian crypto investors to opt for peer-to-peer transfers, spot trading, and WhatsApp or Telegram groups to trade currencies.
A crypto bourse’s UPI platform was recently blocked by SBI.
Even though the top exchanges have seen an increase in purchases in the last few weeks, 60%-80% of all transactions now occur through the new methods that crypto exchanges have introduced.
According to industry watchers, P2P crypto exchanges have seen an increase in methods like spot trading, direct buy-and-sell, and selling and buying through WhatsApp/Telegram groups.
In contrast, about 10-15% of transactions on exchanges were conducted using these methods a year ago.
“In India more than 90% of the users who come onboard from fiat currency use P2P marketplace. A large chunk of users also prefers to directly deposit their cryptocurrency on the OKEx platform to make use of the advanced trading features,” said Jay Hao, CEO of cryptocurrency exchange OKEx.com.
P2P is a popular way to exchange fiat currencies for cryptocurrencies with most crypto exchanges.
“P2P is not a way to trade crypto, but instead, it’s a fiat to crypto on-ramp solution. In the absence of banking options during the banking ban, people would use P2P to convert their fiat to crypto (USDT) and vice-versa. Ever since the banking ban has been struck down by the Supreme Court, most users prefer banking to P2P to deposit/withdraw INR from WazirX,” said Nischal Shetty, CEO WazirX, another cryptocurrency exchange.
A few other banks are still offering services according to some exchanges.
According to an article published on August 31, the Reserve Bank of India missive noted that banks could not rely on its 2018 circular prohibiting transactions involving virtual currencies, because it had been struck down by the Supreme Court.
The price of crypto assets is so high that many exchanges are offering customers Systematic Investment Plans (SIPs) and funds that let customers automatically buy them.
“Investors can earn interest up to 1800% in a 5-year SIP plan which is unmatched by any other asset class in the world,” said Shivam Thakral, CEO of BuyUcoin.