In addition to the Indian P2P market surging in recent months, the country’s DeFi sector has been gaining momentum. Even as fears of another blanket ban on India’s digital asset market linger on, peer-to-peer Bitcoin trading within the Asian powerhouse is still surging, hitting all-time highs over the first week of August. This immense growth was initially spurred by the Supreme Court’s unequivocal decision earlier in March 2020 to repeal an unconstitutional circular imposed by the Reserve Bank of India forbidding local banks and various financial institutions from providing services to crypto exchanges and investors.
According to data aggregated by peer-to-peer Bitcoin (BTC) marketplaces Paxful and Localbitcoins, weekly trading volumes in India have been gaining ground consistently since April. For example, during the first week of August, BTC’s local trade quota stood at $4.4 million, a sharp increase from the $1.52 million weekly trade volume that was witnessed during the first week of January 2020. Additionally, even during the month of March when the Supreme Court lifted the RBI ban and the sentiment of local crypto traders was at its peak, the highest recorded weekly P2P trade volume for BTC was around the $2.28 million mark.
Commenting on the rise of P2P trade in India, Nischal Shetty, CEO of Indian cryptocurrency exchange WazirX, told Cointelegraph that the 2018 restrictions imposed by the RBI made it difficult for Indians to convert rupees to crypto and vice versa. Since the ban was lifted, however, a number of crypto exchanges have been able to create direct banking channels for local currency deposits and withdrawals, thus contributing to the surge in P2P trade
Exchange-based volumes outweigh those of local P2P platforms
As various P2P trading platforms continue to witness an increasing amount of mainstream usage, P2P trade volumes have also spiked across a number of Indian cryptocurrency exchanges. This increase in volume can be attributed to the overall positive sentiment surrounding the global crypto sector, reinforced by milestones such as United States banks being allowed to offer cryptocurrency custody services to their clients as well as various mainstream corporations entering the relatively nascent space.
Expounding his views on the matter, Ashish Singhal, CEO of CoinSwitch, an Indian cryptocurrency exchange, pointed out to Cointelegraph that P2P trade volumes on local Indian exchanges are easily surpassing those currently being witnessed across various other P2P platforms cryptocurrency exchange OKEx announced the launch of its peer-to-peer trading platform, which will allow Indian crypto enthusiasts to buy and sell BTC and USDT with zero transaction fees using Indian rupees.
While the announcement acknowledges the current uncertainty surrounding the Indian crypto ecosystem, OKEx CEO Jay Hao previously shared with Cointelegraph his firm belief that another blanket ban is unlikely: “We are willing to support our Indian partners and are hopeful that we can work with regulators to clarify their main doubts and issues with cryptocurrencies.”
Indian crypto experts are optimistic
Despite the Supreme Court ruling in favor of crypto earlier this year, Shetty firmly believes that owing to the fact that crypto is still a nascent technology, a number of myths and misinformation continue to surround the market at large. However, he is extremely optimistic that the Indian government will follow in the footsteps of countries like Japan, the U.S., the United Kingdom and Australia in regulating its local digital asset market. Amid the devastation to the Indian economy by the ongoing COVID-19 pandemic, with many employees laid off across industrial sectors, crypto remains one of the very few sectors that continues to display sustained growth.
Thus, it could be in the Indian government’s best interest to help along the industry by creating the right regulatory environment instead of implementing a restrictive proposal titled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019,” which seeks to ban digital assets on the basis perceived negative use cases such as money laundering, terrorism financing and so on. However, Singhal is confident that after having learned about the actual utility of crypto and blockchain tech, the Supreme Court is highly unlikely to reconsider its current stance
Singhal also pointed out that the Indian government has yet to clarify its stance on the legal status of the industry and whether the blanket ban is still possible. Meanwhile, officials have clearly stated several times that crypto is not on the same legal stature as the Indian rupee. However, this is not necessarily an anti-crypto stance, since most countries that regulate crypto also consider it an asset class instead of a currency.
DeFi gains momentum in India
As interest in crypto continues to rise, crypto exchange Binance announced on Aug. 24 that it will host a first-of-its-kind decentralized finance-oriented hackathon followed by an accelerator program in the country. Dubbed “Build for Bharat,” a spokesperson for the company stated that the goal is to bridge the gap between the blockchain sector and mass adoption of crypto in India.
As part of the hackathon, “special consideration will be given to various DeFi products that are related to mini-tokens, micro-financing applications, blockchain datasets, blockchain-AI solutions,” a company representative recently told Cointelegraph in an interview. Meanwhile, WazirX announced on August 15 that it is devising its first decentralized finance offering in partnership with the Matic network. Shetty revealed that the offering is currently under development and that a testnet version of the product should be available by the second half of September. Speaking with Cointelegraph about the potential of DeFi tech, Shetty added: “After having made it easy for Indians to access crypto, we want to make it easy for billions of Indians to participate in the DeFi ecosystem.”