The announcement was made back in April requiring banks and financial institutions to dissolve their relationships with any crypto exchanges.
This means that crypto exchanges in India will not be able to liquidate their assets using these channels from July 5.
India’s crypto exchanges will look to take advantage of “peer-to-peer (P2P) trading” to bypass these stringent laws and still cater to the Indian market. Crypto exchanges in the country are planning to shift to peer-to-peer trading where no banks will be involved and buyers and sellers of cryptocurrencies can make deals with each other directly.
WazirX, a local cryptocurrency exchange introduced this idea and hopes to push for the option once the deadline arrives. P2P trading operates by facilitating the transaction between two parties. WazirX will get in on the action by acting as an escrow account to ensure that the deal goes through smoothly.
In a statement, Nischal Shetty, chief executive of WazirX, said
We built an escrow system, where before you sell 1 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)
WazirX will only allow registered customers to perform a P2P trade, with verified details to ensure that the customer is being honest. Another exchange, Koinex, also plans to implement a similar solution for implementing P2P deals.
Supreme Court Backs July 5 Ban
India’s bitcoin market has grown significantly during the last 18 months and there are millions of investors across the country. Many of them have disposed their bitcoins once the ban was announced but there are still a large number who continue to hold on to their bitcoins.
The Internet and Mobile Association of India (IAMAI) did their best to overturn the RBI order. They filed a petition with the Indian Supreme Court to stop the RBI from implementing its ban against dealing with cryptocurrencies. However, the Supreme Court backed the decision of the RBI and upheld the July 5 deadline.
The RBI has come down hard on the crypto currency market in the last 12 months, issuing a number of warnings against dealing with cryptocurrencies. This latest ban is the toughest stance the RBI has taken on the crypto market in the country.