Megha Agrawal
Binance has recently implemented a policy change in India, discontinuing the option for cash deposits in peer-to-peer (P2P) cryptocurrency transactions. This move blocks Indian users from buying or selling cryptocurrencies using cash payments.
Binance Ends Cash Payment Method For P2P Users in India
Previously, Binance offered an escrow service that facilitated transactions once cash had been deposited into bank accounts or handed over in person. This method allowed traders to operate discreetly, avoiding potential governmental scrutiny and tax liabilities. However, Binance has now removed this cash transaction method, although other payment options remain available.
The decision to eliminate cash payments likely stems from a desire to comply with regulatory standards and discourage practices that could evade government oversight, particularly tax obligations. Safety concerns regarding cash transactions have also been raised.
Purushottam Anand, the founder of the legal firm Crypto Legal, has pointed out significant risks associated with cash transactions for cryptocurrencies. He notes instances where traders have faced physical threats or been compelled to transfer digital assets or cash during in-person meetings. These incidents often go unreported due to the ambiguous legal status of such transactions and the fear of retribution by criminals.
Meanwhile, SEBI would retain jurisdiction over other financial assets, while authorities propose that the Pension Fund Regulatory and Development Authority (PFRDA) and the Insurance Regulatory and Development Authority of India (IRDAI) regulate pension-related cryptocurrencies.
Despite the change at Binance, cash transactions for P2P trades are still permissible in places like Dubai, where the government shows a more open stance towards cryptocurrencies, allowing direct cash trades in the local currency, AED.
Cryptocurrency Regulation in India
This policy change by Binance could influence other crypto exchanges in India to similarly cease cash-based transactions, potentially dampening the local cryptocurrency landscape.
The regulatory environment for cryptocurrencies in India is complex, with different governmental bodies holding divergent views. The Securities and Exchange Board of India (SEBI) is working on a framework to facilitate crypto trading in the country. According to internal reports, SEBI intends to regulate certain digital assets while suggesting that the Reserve Bank of India (RBI) should oversee stablecoins and other fiat-backed cryptocurrencies.Meanwhile, SEBI would retain jurisdiction over other financial assets, while authorities propose that the Pension Fund Regulatory and Development Authority (PFRDA) and the Insurance Regulatory and Development Authority of India (IRDAI) regulate pension-related cryptocurrencies.
Conversely, the RBI maintains a conservative stance, advocating for a prohibition on private cryptocurrencies and stablecoins in the financial market.