Violet Vallaya
Major cryptocurrency exchange Binance has suspended cash payments for peer-to-peer (P2P) trading in India, citing regulatory compliance and enhanced security measures. The move comes amid a backdrop of increasing scrutiny of the crypto industry by Indian authorities.
Effective immediately, Binance users in India can no longer buy or sell supported cryptocurrencies by depositing or receiving cash payments.
While the suspension eliminates cash as a payment option, Indian users can still leverage alternative methods like bank transfers and digital wallets for P2P transactions. These methods are generally considered more transparent and easier to track, potentially mitigating money laundering risks.
P2P trading allows users to directly buy and sell cryptocurrencies from each other, often using cash for convenience. While this method has been popular in regions with limited access to traditional banking systems, it also raises concerns about money laundering and other illicit activities.
Until now, local crypto traders in India could use Binance’s “escrow service” to facilitate P2P trades. This service allowed them to post buy or sell orders on the exchange platform and settle transactions by making payments in Indian rupees (INR). The cash option was particularly attractive because it helped traders avoid the stifling tax regulations imposed by the Indian government on crypto transactions.
The suspension reflects a broader trend of increased regulatory oversight within the Indian cryptocurrency landscape. The Indian government had issued show-cause notices to several foreign crypto exchanges, including Binance, for non-compliance with regulations.
Interestingly, the cash option still exists for traders using the United Arab Emirates dirham (AED). Binance allows buyers and sellers located in Dubai to settle payments in AED cash. Dubai is gradually positioning itself as a cryptocurrency capital, where cash and cryptos are freely interchangeable. Some developers even accept cryptocurrencies as payment.
It remains to be seen how Indian users adapt to this change and whether Binance or other exchanges introduce alternative solutions to cater to those who previously relied on cash transactions.
