P2P transactions gain traction in India, despite SBI disabling UPI for crypto merchants

The crypto situation in India continued shift in different directions. Just recently, India’s biggest lender disabled UPI payment services for crypto merchants. It was a major blow for Indian crypto enthusiasts. However, it didn’t quite deter their plans to trade/invest in digital assets. Here’s why.

Indians were now turning to P2P platforms and messaging platforms to expedite crypto trades. The economic times reported,

“Indian crypto investors are now opting for peer-to-peer transfers, spot trading and WhatsApp or Telegram groups to trade currencies due to unpredictable banking services being offered to exchanges by the banks.”

These platforms accounted for about 60–80% of all transactions as per the report. Meanwhile, other methods such as spot trading, direct buy-and-sell, and buying directly through mutual friends saw a spike as well. A surge of almost 80% of all transactions on exchanges, up from about 10-15% last year. Jay Hao, CEO of cryptocurrency exchange OKEx.com, said,

“In India more than 90% of the users who come onboard from fiat currency use P2P marketplace. A large chunk of users also prefer to directly deposit their cryptocurrency on the OKEx platform to make use of the advanced trading features.”

In addition to this, Nischal Shetty, CEO of WazirX said,

“P2P is not a way to trade crypto, but instead, it’s a fiat to crypto on-ramp solution. In the absence of banking options during the banking ban, people would use P2P to convert their fiat to crypto (USDT) and vice-versa.”

India is recording a shift in cryptocurrency interest. As covered in a Chainalysis survey, India stood at the #2 spot on the Global Crypto Adoption Index. Earlier, WazirX’s chief while talking to The Economic Times reported, “Tier-2 and tier-3 cities have driven almost 55 percent of total user sign-ups on WazirX in 2021, thereby overtaking tier-1 cities, which demonstrated a sign-up growth of 2,375 percent.”

Having said that, the Indian government’s position on crypto regulations remains unclear and no significant steps to bring clarity have been taken yet. In spite of this, the outlook, at this point at least, appears to be somewhat optimistic for Indian investors.