Investing in cryptocurrency in India doesn’t mean you only keep your eyes on the best prices and buy or sell crypto coins at the right time. As things stand, you also need to keep an eye on what’s the status with payment options, which allow you to add money to your crypto transaction app’s wallet to buy and sell cryptocurrency. For a while now, UPI, or unified payments interface, has been unavailable for apps including WazirX, CoinSwitch Kuber and CoinDCX. And starting today, WazirX users will now have their options further limited, after the company confirmed that the bank transfer option is no longer available for users. At least for the time being. The only available option, called WazirX P2P, allows you to buy and sell USDT directly with other buyers and sellers. But how does it work? Is it seamless or is it a web of complexity?
What Is WazirX P2P?
WazirX P2P, allows you to buy and sell USDT directly with other buyers and sellers, with the WazirX platform just as a medium to match you with the right buyer or seller at the time. That’s what the P2P bit means—people to people. Think of it as a Tinder, but for cryptocurrency exchanges. You get matched depending on whether you want to buy or sell and whether the other user wants to buy or sell. Except in Tinder, the hope is for a long lasting relationship, and here you can also choose to keep trading with preferred buyers as an option. This is done with something called the XID, which is unique for all users. Much like your email address, for instance, or a username on an online forum. Your XID must contain only alphabets and numbers. It must be minimum 4 characters and maximum 15 characters. You can also share these with other crypto users for cryptocurrency trading. Once you decide and punch in the quantity of USDT you want to trade, the app then proceeds to match you with sellers or buyers who is looking to make a trade at that time. For instance, if I am to buy 15 USDT, WazirX P2P will search and connect me with any sellers who may want to sell USDT at that time. At the time the exchange is agreed and commences, WazirX keeps the USDT in an escrow account for safekeeping, to prevent false transactions or frauds. Once the transaction is confirmed by the seller and the buyer, the USDT is released to the deserving recipient, in this case, the one who makes the payment to buy.
Does It Really Work?
Look, how you interact with this feature and your experience with it will depend on a lot of factors. Primarily driven by the presence of another crypto investor who is willing to buy or sell exactly as how you want the transaction to go. During a test to buy 15 USDT a couple of times, WazirX attempted to match me with interested sellers. However, no matches or P2P were available, which perhaps highlights the limitations of this method—you will be dependent on someone being ready at any time to make the trade, which may further reduce your accuracy of trading in crypto coins exactly when the value may be right for you.
What Is USDT And Is It Safe?
That being said, USDT (also known as Tether in many circles) is a stable coin and the value is pegged at $1 always. It is always converting your cash into digital currency at the trading rate for the US$. This is one cryptocurrency has is not at all volatile and you will never see massive spikes or dips in its valuation, since it can and is linked to the valuation of national currencies. If you want to invest in a stable crypto as a general rule, currency linked crypto coins are a safer bet.And once you have the USDT in your account, you’ll have to convert your fiat to USDT using WazirX P2P and then use the USDT to buy any cryptocurrency on the platform. At the time of selling any cryptocurrency, you’ll have to convert that into USDT within the app and then sell using USDT. Do note though, the currency valuation changes as they happen through the day will have an impact on how you much you need to spend to buy USDT or how much you’ll earn when selling USDT, and you’ll have to ideally work this as you’d have bought or sold US$ currency in the simpler times.
But Why Is The Bank Transfer Option No Longer Available?
In a communication sent out to all WazirX users, the platform has clarified that their Paytm Bank account will not be operational now, which means the bank transfer option using NEFT, RTGS or IMPS transfers from your bank account, will, not be available for the time being. That is till WazirX is able to find a new banking partner for bank transfer and deposit options. This is the latest in the unfolding chapter of cryptocurrency trading in India and the reluctance of banking institutions to engage with crypto exchanges. At this time, WazirX as well as CoinSwitch Kuber and CoinDCX are unable to offer UPI payments as an option for users, because of this reason.
What Happens If I Had Already Made A Transaction From My Bank To WazirX?
WazirX says that starting 11:59ppm on May 20, 2021, INR or Indian Rupee deposits to the Paytm Bank account will not be accepted. Simply put, this means that the recipient bank account, which in this case, was WazirX’s Paytm Bank account, which now will no longer accept any transfers made to it. “If you make any INR deposit via IMPS/NEFT/RTGS to our PayTM Bank account after 11:59 PM IST, it will revert to your source bank account within 7-10 business days,” says WazirX in a statement shared with users. They do add,” While we work with our partners to add more INR deposit options, we recommend you use WazirX P2P to buy/sell USDT with INR.”
Does This Impact All Cryptocurrencies?
This is just the latest in the long running saga of banking institutions in India showing unwillingness to support cryptocurrency exchanges in India. Apps including WazirX, CoinSwitch Kuber and CoinDCX have also been unable to offer UPI, or unified payments interface, as a payments option for users for adding money to in-app wallets for trading in cryptocurrencies including Bitcoin, Ethereum, Litecoin, Cardano, Dogecoin, Shiba Inu and Polygon, to name a few. The National Payments Corporation of India, which runs the UPI real-time payments system, has refused to ban cryptocurrency transactions in India. Instead, they have asked banks to make their own guidelines with regards to transactions that involve cryptocurrencies. In an interaction with CNBCTV18 in March, Finance Minister Nirmala Sitharaman clarified that, “There will be a very calibrated approach to be taken on crypto” and insisted that there will be a “window available for all kinds of experiments”, something that is seen as a positive for the cryptocurrency space in India.
For a user to use UPI payments, it’ll always be done from a bank account that is KYC-compliant, often using the biometrics authentication using the Aadhaar card. Similar KYC rules also apply for bank accounts and all bank to bank transactions as well as transfers are KYC compliant through the chain. It is not clear why banks are payment gateways are hesitating to allow cryptocurrency transactions at this time. Banks are yet to issue any advisories or guidelines to users, who may be interesting in investing in cryptocurrencies such as Bitcoin and Ethereum.
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