- Binance has discontinued cash payments for P2P cryptocurrency transactions in India, aligning with higher compliance standards and addressing safety concerns.
- This change, while eliminating a tax evasion avenue, still allows cash transactions in UAE dirhams, highlighting regional differences in crypto regulations.
In a significant move, Binance, the world’s largest cryptocurrency exchange, has discontinued cash payments for peer-to-peer (P2P) transactions in India. Until recently, Indian crypto traders could leverage Binance’s ‘escrow service’ to facilitate buy or sell orders, settling the transactions with cash in rupees. This change marks a notable shift in the crypto trading landscape for Indian users.
End of an Era for Cash Deals
Previously, Binance provided various payment methods for P2P transactions, including online fund transfers, Unified Payments Interface (UPI), physical cash delivery, and cash deposits into bank accounts. This flexibility was particularly appealing for traders looking to circumvent the hefty taxes imposed by New Delhi on cryptocurrency trades. However, the dynamic nature of cryptocurrencies, with their rapid price fluctuations, necessitates reliable and secure transaction methods.
Binance’s decision to halt cash payments is likely influenced by the need to align with higher compliance standards and gain legitimacy in markets like India. The exchange has faced regulatory challenges in various countries, and this move may be part of a broader strategy to enhance its reputation and operational integrity.
According to Purushottam Anand, founder of Crypto Legal, a Bengaluru-based blockchain and crypto-focused law firm, “P2P cash transactions, with or without the involvement of any exchange, expose parties to serious physical and financial risk. There have been cases where traders have been physically assaulted and forced to transfer their virtual assets or hand over cash during physical meetings. Victims hesitate in filing criminal complaints due to regulatory uncertainty regarding the legality of such cash transactions, especially if it involves more than ₹2 lakh, and fraudsters prey on such fear.”
Interestingly, while Binance has ceased cash transactions in India, the option remains available for transactions in UAE dirhams. This allows Binance to match buyers and sellers in Dubai who can settle payments in AED cash. In Dubai, cash and cryptocurrencies are more freely interchangeable, and the city is gradually positioning itself as a cryptocurrency hub. Some developers in Dubai even accept cryptocurrencies for real estate transactions.
In India, Binance’s facilitation of cash-for-crypto trades was operating in a regulatory grey zone. While such trades allowed users to evade taxes, the exchange was not technically violating Indian laws. Binance functioned as a third-party escrow service for transferring cryptocurrencies, which are not recognized as legal tender in India. In these P2P trades, Binance held custody of the cryptocurrencies and released them only after the seller confirmed receipt of payment.
Traders could set timers for concluding trades and rate each other, with Binance stepping in only to mediate disputes. The P2P window with the rupee payment option was utilized by some crypto brokers, making this a notable shift in the trading environment.
As the crypto landscape continues to evolve, traders and exchanges alike must adapt to regulatory changes and strive for secure, compliant trading practices. Binance’s move to end cash payments in India is a step in this direction, reflecting the ongoing efforts to balance innovation with regulatory compliance.
