In order to bypass the Reserve Bank of India diktat which became effective last week, Coindelta, a Pune-based cryptocurrency exchange has joined the bandwagon of companies entering into peer-to-peer or P2P trading and decided to launch a platform named Flux.
Using Flux, which will go live on July 15, traders will be able to exchange bitcoin, ethereum, ripple, and USDT (also known as Tether, a USD backed cryptocurrency).
Talking to Moneycontrol, Shubham Yadav, the business head of Coindelta explained how Flux will work. A trader who already has a wallet with the exchange and has cryptocurrencies stored in it can put up his or her offer to sell via the platform. It will generate a link which can be seen by other traders on the platform.
As soon as a trader decides to sell, say, 10 bitcoins, it will be reserved by the system so that the user will not be able to use it until the sale is complete.
Once the trader who wants to sell the bitcoins is approached by a buyer using the link, and a deal is agreed upon, the buyer will need to transfer the amount to seller’s account in a stipulated time. Once the deposit is confirmed by both the parties, Flux will transfer bitcoins from seller’s wallet to the buyer’s wallet.
The company has also built a dispute resolution system on the platform, in case there is one. The system will try to resolve the disputes “swiftly”, Yadav said.
Flux will have to compete against other players which are already active in the market and work on the same modus operandi.
WazirX is one of the many companies that have turned to Peer-to-Peer transfers, allowing users to buy and sell crypto for rupees directly with each other.
The seller deposits the crypto with WazirX, which the brand escrows for safekeeping during the transaction. On the other end of the spectrum, the buyer pays the seller in rupees and as soon as the seller confirms receipt of the payment, WazirX releases the crypto to the buyer.
However, there are some concerns being raised about illegal trades using P2P which can be done through cash, since the banks are no longer allowed to deal with cryptocurrencies.
On being queried, what if RBI makes P2P its next target, will there be any inconvenience to traders while filing tax returns, Yadav said, “It should be noted that government has not banned cryptocurrencies and its trading. So, even if RBI comes down on P2P, people will still be able to file tax returns because they are disclosing their income from an asset which is not illegal in India. I don't see any problem with that at all.”
“Even in case government bans it (in future), which will be really bad for the ecosystem, your returns will be from a period during which it was not illegal,” he adds.
Since the uncertainty over the status of cryptocurrency lingers, for enthusiastic traders, the P2P mode of trading could be a great way to circumnavigate the regulatory hurdles or the lack of any regulation itself.
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