Bitcoin exchanges now are working on OLX-Quikr model platforms

With the three-month window ordered by the Reserve Bank of India (RBI) for banks to stop dealing with all crypto-currency trading platforms ending this Thursday, the latter are working on OLX-Quikr model platforms or peer to peer transfer.

In the latter transfer, investors may buy or sell such currencies for the rupee directly with each other without a hitch and money transferred from a banking channel or other permissible route.

In the days after RBI announced its coming ban, investors put much more rupee deposits with exchanges than those who sold bitcoin and withdrew their money. In those days, crypto-currencies lost India premiums and were quoted at a discount to their international price. However, the discounts have now gone and prices are in equilibrium. This development gives exchanges the confidence on coming up with alternatives, rather than waiting for the court ruling on the issue.

WazirX, a new exchange, started operating a few months before the RBI order; it launched 35 crypto-currencies for trade. Two older crypto exchanges have finalised plans and would be putting these in place for similar platforms.

WazirX has already listed the 35 currencies. Nischal Shetty, chief executive, said: “The initiative will help crypto traders in India to convert their rupees to crypto and vice versa when needed.”

On the platform's working, he said the exchange would keep information on investors wanting to buy and sell crypto currencies. The exchange will lock the currencies someone wants to sell; when a buyer comes, the information will be given to him and the deal will be done. Once the buyer transfers money to the seller by normal banking channels, the exchange will release the currencies and transfer to the buyer. Money transfer will be between buyer and seller, the exchange being a facilitator.

All crypto-currency exchanges (around a dozen are big and serious players) have, as a precautionary measure, issued warnings to investors to withdraw cash ahead of the RBI ban taking effect. Most of them have listed at least a dozen currencies for trading, promoting one over the other without involving banks.

All of them are not proceeding with ‘Plan B’, the peer to peer platform. Zebpay, the largest exchange, is confident on continuation of policy. Ajeet Khurana, chief executive of the Ahmedabad-based exchange, said: “We believe the future of fintech is in tokenisation and blockchain. It is our responsibility to convince the government that India should not be caught on the wrong side of history by missing this bus. As a result, for our Indian business, we have no Plan B.”

From Friday, any deposits of traders or sale proceeds from crypto-currencies such as bitcoin cannot be transferred by the exchange back to a bank account and nor by investors to an exchange’s bank account. Banks will close such accounts of exchanges. A sector official said in recent days, investors, especially smaller ones, had been seen selling and taking the money back. Smart ones are holding on to their crypto-currencies.

There is a hearing in the Supreme Court on Tuesday, a day before the RBI window ends. Next week, a committee of secretaries, headed by the secretary, department of economic affairs, is to also finalise a report on policy in this regard.

Many investors say they are confident and largely stay invested. Sahil Shah, a realty and bitcoin consultant, said: “I am still invested in it and will wait for RBI to take a positive stance. Meanwhile, we will hope that exchanges find some other legal route, so that no one is at risk.” There are many like him, according to an exchange official.