After RBI stay Cryptocurrency firm avoiding banking transactions to do business

The Reserve Bank of India (RBI) has put on a stay on the organization doing business in cryptocurrency. A petition filed by the Internet and Mobile Association of India on the support of cryptocurrency is declined by Supreme Court of India for the urgent hearing, now some cryptocurrency firms such as WazirX and Koinex are resorting to peer-to-peer trading.

In this kind of trading, buyers and sellers of cryptocurrencies can deal with each other directly while cryptocurrency firms can act as an escrow account that holds the cryptos during the transaction to avoid cheating.

Nischal Shetty, chief executive of WazirX, talking to ET said, “If banking is something the exchanges are not allowed to do, then the solution is that direct banking doesn’t come in”.

He explained the escrow system in this case and said WazirX has built a system in which before a seller sells a bitcoin, he/she needs to deposit the bitcoin into the company’s escrow for safekeeping. Once a buyer pays rupees to the seller, WazirX releases the crypto to the buyer, after getting a confirmation from the seller.

The platform, however, is playing safe and aims to avoid any unscrupulous activity by allowing only registered users with verified KYC details to trade on the platform. It is different from websites like localbitcoin.com that allow strangers to exchange their local currency for bitcoins.

Ever since the apex banking body released a statement in April directing all regulated entities, including banks, e-wallets, and payment gateway providers, to stop dealing in the decentralized currency, cryptocurrency traders have been in a panic mode.