Cryptocurrency (Representational image: Shutterstock)
Recently, Paytm payments bank joined the constantly growing list of financial institutions that are distancing themselves from cryptocurrency exchanges like Wazir X, Coin DCX, ZebPay, and more. With YES Bank and ICICI already disassociating themselves from these exchanges, Indian investors are increasingly left with negligible payment and deposit choices when it comes to cryptocurrency-related transactions.
Adding to the growing unwillingness of various banking institutions to facilitate cryptocurrency transactions in the country is its grey and vague regulatory landscape. And even though the government is opting for a “calibrated” approach towards adopting cryptocurrency, which can only mean green shoots for the nascent Indian crypto industry, most prominent exchanges like Wazir X and Coin DCX are yet to offer the widely used UPI (Unified Payment Interface) as a payment option for adding money to wallets for trading in bitcoin, dogecoin, ethereum and more.
Interestingly, the National Payments Corporation, which runs the UPI system has not weighed in on banning cryptocurrencies. However, that does nothing to reduce the transactional issues faced by Wazir X, Coin DCX, and more.
According to a statement by Coin DCX, the exchange currently has only two fully functional modes of payment at present that are utilised to accept INR Deposits. The exchange is constantly working to add more channels as soon as possible.
Per a tweet by Nischal Shetty, Founder and CEO, Wazir X, the exchange is looking to add more banking partners soon. “Earlier, we had informed our users that Paytm Bank banking services were no longer available for bank transfers, and the WazirX P2P method was the only available option at this time—in our experience, that is a bit of a hit or miss, depending on how lucky you get. We’re at the finishing stages of adding new banking partners and bringing in multiple INR deposit options for our users to deposit funds to WazirX wallet. Parallelly, the team is in constant conversations with the banks who are still holding on to the old circular or don’t have any idea of how this is creating confusion,” the statement read.
Most investors, though, find the current deposit method to be extremely time-consuming and cumbersome. Current deposit and payment techniques do not augur well from the perspective of intra-day trading, where transactions are required to be settled and reflected within seconds.
Delhi-based communications professional Karan Anand, who is a regular cryptocurrency trader, is one of many such irate investors. He recounts his experience, where he deposited money in his crypto wallet to buy Ethereum during a market dip, but the money was reflected in his account after 35 hours, by which time the market had recovered sufficiently. One of his family members wasn't able to deposit funds either, which led to them missing crucial market opportunities.
“They really need to smoothen the deposits basically. You can't have people waiting for days to be able to buy cryptocurrency, especially when you are advertising that you can do it in minutes on these platforms,” he said.
WazirX, which shot to popularity thanks to its P2P (People to People) trading mechanism, suggested that for the time being, this was the only way to trade on their platform.
The mechanism relies on USDT, more commonly known as Tether. Since it is linked to the valuation of a currency like a dollar, it is relatively stable with its value marked constantly at $1. All your money is converted into USDT for transacting on the exchange.
Think of this P2P mechanism as simply a smart virtual marketplace, where you are matched with the right buyer or seller, depending on your requirements. The process is simple. Say you want to buy 200 USDT. You punch in the figure and the platform will connect you with sellers who are looking to trade at that moment. While the transaction is in process, the USDT is kept safely in an escrow account to prevent fraud. Once both parties agree on the terms and proceed with the transaction, the money is sent to the recipient party. You are also allotted a unique XID on the WazirX platform, which allows you to continue trading with buyers and is shareable with other traders as well. However, the P2P mechanism has its own limitations, given that there is no guarantee of buyers or sellers being immediately available when you want, which can stop you from optimising the transaction and gain maximum profit. This is why there is a dire need to have a variety of functional payment platforms for the exchanges to trade up to their full potential.