The Reserve Bank of India’s recent ban on financial institutions transacting with companies using or offering cryptocurrency services will certainly have consequences for the nation. However, thanks to peer-to-peer exchanges like Paxful, one of these is unlikely to be cryptocurrency usage and adoption in general.
Paxful Offers Users Exposure to Cryptocurrency Whilst Completely Bypassing the Banks
On April 5, the Reserve Bank of India issued a statement which banned the the nation’s banks from dealing with cryptocurrency exchanges and other similar services. Thankfully for India’s crypto enthusiasts, it didn’t drop any hint of a pending government crackdown on digital currencies though.
According to Sathvik V, the CEO and founder of Unocoin – one of India’s largest wallet and exchange platforms – the statement will leave the “legality status of Bitcoin or other crypto-currencies in Indian… unchanged”. He believes the RBI move is to protect people and companies from the risks associated with such volatile assets.
Whilst exchanges like Unocoin plan to continue their businesses, the fact that users will no longer be able to deposit and withdraw from exchanges directly to their bank accounts will surely impact their bottom line. However, there are other forms of exchange that will be able to provide off and on ramp services for those wishing to enter or exit the market.
Peer-to-peer exchanges such as Paxful allow users to organise trades and pay for crypto with a variety of different methods. These include PayPal, Western Union, and even various gift card sellers such as Amazon or OneVanilla. Peer-to-peer exchanges also sit more logically with the entire idea behind cryptocurrency. Surely, the antithesis of a decentralised system such as Bitcoin is using a hugely centralised institution such as a bank. The oft-repeated, unofficial slogan of Bitcoin being “be your own bank” seems downright silly if having a traditional bank account is a prerequisite for using the system in the first place.
What’s more, peer-to-peer trading rose dramatically in China following the government’s crackdown on exchanges last autumn. There is no reason to believe that the same will not happen in India too. With less draconian internet regulation, online, peer-to-peer markets like Paxful will likely flourish in the nation.
Whilst the RBI’s statement presents opportunity for services like Paxful, and doesn’t represent a direct threat to Bitcoin users in India, it’s believed that it will have some negative consequences for the whole space in the nation. Raj Chowdhury, the MD of HashCash Consultants feels that the move was poorly thought out. For him, the decentralised nature of cryptos make them virtually impossible to police with bans. He believes that rather than protect users, the RBI decision will be detrimental to India:
“The move will stifle innovation in the country and companies will look to move to greener pastures. The government will also move on crucial tax money that they could have earned by regulating the market.”