Peer-to-peer platforms are merging as outlets for crypto buyers and sellers to facilitate transactions and avoid potential regulatory issues with traditional banks. Piyush Shulka reports in MoneyControl, highlighting the example of platform WazirX and stablecoin Tether:
“Cryptocurrency exchange and trading platform WazirX has a peer-to-peer platform named WazirX P2P through which users can place their orders to buy or sell cryptocurrencies.
A buyer first places an order to buy Tether (USDT). Upon getting matched with a seller, the buyer pays cash directly to the seller. After the seller confirms receipt of payment, WazirX releases the escrowed Tether to the buyer. A similar process is followed when a client wants to sell cryptocurrency.
In this set-up, the exchange only facilitates the transaction – it does not accept payment from customers nor does it transfer funds to their accounts. All payments are made directly between the buyer and seller brought together by the exchange. The reason is that most banks don’t give their customers access to crypto transactions…”
This process could be of added need in countries like India, where regulatory reforms from the Reserve Bank of India are limiting purchases and inhibiting banks from participating in the crypto market.
“Bankers said the biggest challenge in dealing with cryptocurrencies is the lack of clarity on the regulation of the asset. The RBI has repeatedly sounded caution over the use of cryptocurrency and the threat that it poses to financial and economic stability. The central bank has cited multiple risk factors including high volatility, the absence of underlying assets, and its highly speculative nature to warn investors against using cryptocurrencies.”
P2P will not be without its limits as the market inherently requires matching of buyers and sellers of stablecoins, which will take time in a developing market.
Overview by Jordan Hirschfield, Director, Prepaid Advisory Service at Mercator Advisory Group