Binance: Indian Crypto Traders Do Business on Binance, Settle Home in INR

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Binance, the world’s largest cryptocurrency exchange, is luring traders to India to buy and sell crypto on its platform while letting them strike deals in rupees — either through online fund transfers to from domestic bank accounts, either using services like G-pay, or even physical cash delivery. Here is a case where an overseas exchange offers an escrow service that practically matches a local buyer and seller in an offshore market although the payment is settled here in INR.

The transactions have reportedly caught the attention of regulators in India.

Technically, Binance may not be breaking any laws here as it does not operate a rupee bank account but merely acts as a neutral third party, providing an escrow facility for the transfer of cryptocurrencies which are not anyway not recognized as legal tender. However, there is a good chance that local merchants, by placing advertisements to buy or sell crypto on the Binance site, which is full of Indian logins, could bypass the rules on exchange control and the fight against corruption. money laundering. UPI, IMPS, and G-pay, Binance’s peer-to-peer service also includes cash-to-bank and cash-in-person as payment options for buyer and seller to choose and complete a transaction .

A fortnight ago, the local cryptocurrency and digital asset industry shared a video with the Reserve Bank of India (RBI), demonstrating a crypto token exchange on Binance and using one of India’s digital wallets to make payment in rupees. The local crypto industry – stifled by high taxes and lack of services by banks fearing backlash from RBI – hopes the video and their depiction will draw the attention of regulator and governments to the trades taking place. mock the rules imposed by New Delhi and the central bank.

Check out the stories you care about Someone can sell crypto from their wallet opened with Binance to another buyer in India who receives the crypto in their wallet with Binance, and then pay them back in rupees. No one can find out. No tax is paid, but the trade continues. Some of the transactions are quite large, a trader told ET. A trader can set a timer to close a trade and the buyer and seller can rate each other. There is no way for Binance to verify the money transfer. He can only intervene as a mediator in the event of a dispute. Thus, it is entirely based on trust with both buyer and seller acting in good faith, an industry person said. Binance holds custody of users’ crypto assets and when the buyer and seller agree on an exchange, the exchange holds the crypto in escrow, after which the buyer has a certain amount of time to move the money. Once the seller confirms, the assets are released.

Several of the Indian traders using the Binance site are believed to be crypto brokers, trying to scout customers. Once such a person establishes contact with the counterparty, gets their phone number, they can deal directly, said another person familiar with the industry.

Binance offers this P2P service for free, presumably in an effort to onboard customers with basic KYC formalities. Some of these customers may then upgrade to more exotic products for which there may be a service charge,

Video of Binance trading was shared with RBI officials shortly after industry body Bharat Web3 Association requested the central bank to allow resumption of UPI/payment services for VDA (virtual digital asset) sector ).

ET’s query to a Binance spokesperson went unanswered until press time.

According to industry estimates, user activity at major India-based exchanges fell by 90% in 2022, when trading volumes and application downloads for these exchanges also fell. Downloads for a major local exchange increased from 22 lakh in January 2022 to 1.6 lakh in August, compared to an increase in downloads of 4.3 lakh in August 2022 for a global exchange of crypto.

Several other international exchanges also saw similar increases in user base and trading volumes over the same period in India. Some of these exchanges are Indian but operate from outside the country due to the non-cooperative nature of regulation and user convenience in the industry in India. This problem is further magnified by restricting access to basic modern services such as access to banking and payment services, the industry said in its letter to RBI last month.

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