Indian Crypto Exchanges Resort to Peer-to-Peer in Anticipation of Court Ruling

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Tue, 07/03/2018 - 09:04
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    Indian crypto exchanges have been forced into peer-to-peer trading while they await a Supreme Court hearing due to be laid down on July 3

The situation in India sits on a precipice as the decision laid down by the central bank to essentially make it impossible for businesses to operate with cryptocurrencies has been taken to court.

In the meantime, those cryptocurrencies that have tried to keep their doors open in the wake of this uncertainty have been forced to adopt a more peer-to-peer based business model as they await the hearing in the Supreme Court.

New solution

Two such examples of cryptocurrency exchanges looking to keep going in amongst the uncertainty are WazirX and Koinex, both have decided to resort to peer-to-peer trading.

“If banking is something the exchanges are not allowed to do, then the solution is something that direct banking doesn’t come in,” said Nischal Shetty, chief executive of WazirX.

This is their only option as they wait for The Internet and Mobile Association of India (IAMAI), which represents Internet firms who filed the written petition against the RBI.

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The change for these exchanges sees them now operating more as an escrow account than a traditional exchange, holding the cryptocurrencies while the parties make the exchange in coins.

“We built an escrow system, where before you sell one Bitcoin, you (A) deposit the Bitcoin to our escrow for safekeeping. Once the buyer (B) pays rupees to you (A), WazirX releases the crypto to the buyer (B), after getting a confirmation from you (A),” said Shetty.

July 5 deadline

The application to the courts is cutting it very fine as the RBI had stated that it’s grace period for businesses to stop operating with cryptocurrencies was July 5.

“The court could allow the plea application and stop the RBI directive in which case banks can continue to offer services to exchanges until July 20,” said Mohammed Danish, advocate and crypto analyst.

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About the author

Darryn Pollock is an award winning  journalist from Durban, South Africa. He picked up Vodacom’s Regional Sports Journalist Award in 2017 while expanding his Blockchain and cryptocurrency reach.  He is a contributor to Forbes, Cointelegraph, Binary District, and of course, U.Today. Darryn’s belief is that Blockchain technology will be the driving force of the next technological wave and it is the obligation of journalists and writers to tell its emerging story with integrity and pride.

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