Following the NPCI statement regarding Unified Payments Interface (UPI), some Indian crypto exchanges have reverted to peer-to-peer (P2P) transactions.

Coinbase was among the first to suspend UPI.

When a user at the crypto  exchange  wishes to buy a cryptocurrency, the system will connect the user directly to the seller. The buyer pays the seller and in return the seller transfers the cryptocurrency to the buyer's wallet.

In the above manner the transactions take place between 2 individuals, which bypasses any restrictions imposed on the cryptocurrency exchange.

The P2P structure is similar to what Paxful has been offering for several years.

An official from one of the Indian crypto exchanges told local media that P2P crypto transactions are not violating the law: “This is not how an exchange should be functioning. It’s certainly less efficient. But, apparently there is no violation of any  regulation  or law. It’s a simple money transfer from A to B over net banking or IMPS or NEFT, and it’s happening outside the exchange.”

Bank Transfers to the Exchange

Other crypto exchanges have adopted a different method. The client makes a bank transfer directly to a company's bank accounts. Once the funds are received the exchange adds credit to the client's wallet.

A lawyer has warned that the above approach may require regulatory approval and explains why.

“If it’s perceived that by directly accepting funds from buyers, an exchange is offering some kind of a wallet facility to the trader, there would be regulatory issues.

"If an exchange accepts money to sell crypto, considering it as a commodity, or acts as an intermediary engaged in collection of funds, it’s one thing.

"But, if it is receiving funds from thousands of traders and holding it till trades are executed, the question is would it be construed as deposits or wallet facility. If so, it may require regulatory approval."

source: ET

Some Indian crypto investors began shifting towards exchanges outside.

Following the NPCI statement regarding Unified Payments Interface (UPI), some Indian crypto exchanges have reverted to peer-to-peer (P2P) transactions.

Coinbase was among the first to suspend UPI.

When a user at the crypto  exchange  wishes to buy a cryptocurrency, the system will connect the user directly to the seller. The buyer pays the seller and in return the seller transfers the cryptocurrency to the buyer's wallet.

In the above manner the transactions take place between 2 individuals, which bypasses any restrictions imposed on the cryptocurrency exchange.

The P2P structure is similar to what Paxful has been offering for several years.

An official from one of the Indian crypto exchanges told local media that P2P crypto transactions are not violating the law: “This is not how an exchange should be functioning. It’s certainly less efficient. But, apparently there is no violation of any  regulation  or law. It’s a simple money transfer from A to B over net banking or IMPS or NEFT, and it’s happening outside the exchange.”

Bank Transfers to the Exchange

Other crypto exchanges have adopted a different method. The client makes a bank transfer directly to a company's bank accounts. Once the funds are received the exchange adds credit to the client's wallet.

A lawyer has warned that the above approach may require regulatory approval and explains why.

“If it’s perceived that by directly accepting funds from buyers, an exchange is offering some kind of a wallet facility to the trader, there would be regulatory issues.

"If an exchange accepts money to sell crypto, considering it as a commodity, or acts as an intermediary engaged in collection of funds, it’s one thing.

"But, if it is receiving funds from thousands of traders and holding it till trades are executed, the question is would it be construed as deposits or wallet facility. If so, it may require regulatory approval."

source: ET

Some Indian crypto investors began shifting towards exchanges outside.