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    Crypto trading slumps In India after money transfer hassles; what can investors do?

    Crypto trading slumps In India after money transfer hassles; what can investors do?

    Crypto trading slumps In India after money transfer hassles; what can investors do?
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    By CNBCTV18.com  IST (Published)

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    The number of crypto investors in India ranges between around 15 million and 20 million, with total crypto assets being held amounting to $5.25 billion. The country needs crypto-friendly legislation if the administration wishes to sustain this massive industry.

    On 6 April 2022, Coinbase opened up the Unified Payment Interface (UPI) to its Indian users. However, the next day, the National Payment Council of India (NPCI) released a statement saying it was unaware of any crypto exchanges using UPI payment services. Therefore, to avoid any further hassles with the payment council, Coinbase temporarily stopped its UPI payment facility.
    According to the Financial Express, many Indian crypto exchanges ended up following suit. In addition to UPI payments, several exchanges have also taken down their RTGS, NEFT and IMPS services. While some exchanges are still offering the net banking option, there are very few banking partners to choose from. Therefore, making INR deposits on Indian crypto exchanges has become next to impossible.
    The developments have dealt a severe blow to crypto exchanges in India and have resulted in a total free fall in daily trading volumes across the country.
    “The regulatory regime for crypto in India has been clarified significantly post budget, but it appears there is still room for interpretation post NPCI’s comments. Most exchanges are employing an abundance of caution, seeking not to offend the regime in what is projected to be one of the largest crypto markets globally,” said Utkarsh Sinha, MD at Bexley Advisors, to The Financial Express.
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    After the NPCI’s pushback, all payment service providers have taken a backfoot and are employing a wait-and-watch strategy. Data pulled from CoinGecko shows that the trading activity on WazirX, India’s largest crypto exchange by volume, has plummeted 68.4 percent in one fortnight. It is also down by 88.1 percent over the last one year and 94.3 percent since the all-time high on 28 October 2021.
    What can investors do?
    Amid all the unease, it is investors who find themselves between a rock and a hard place. However, there is some good news for crypto users in the country. According to the Financial Express, the peer-to-peer (P2P) payment option is still available, and investors can use it to trade cryptocurrencies for other tokens or fiat currency.
    Even when the RBI clamped down on banks in 2018, this route was still open for crypto trading. And since blockchain technology is exceptionally reliable and fake tokens cannot be traded over exchanges, P2P payments are relatively safe and offer the next best alternative.
    What are P2P transactions and how do they work?
    With the peer-to-peer model, the exchange simply links the buyer and seller. The buyer can then directly transfer money to the seller. After receiving the funds, the seller can transfer the tokens from their wallet to the buyer’s wallet. This way, the transaction is between two individuals and there are no restrictions on such transfers.
    “This is not how an exchange should be functioning. It’s certainly less efficient. But apparently there is no violation of any regulation or law. It’s a simple money transfer from A to B,” said a source from one of the exchanges in an interview with the Economic Times.
    Add to your crypto stockpile without buying new coins
    Another option is staking. If you have idle cryptocurrency in your wallets, ‘staking’ is a terrific way to put those assets to work. You can pledge these tokens to the blockchain network and become a transaction validator.
    The blockchain then uses your computer to authenticate transactions. And in exchange for dedicating your tokens and computing power, the blockchain will reward you with a certain amount of newly minted coins.
    According to data from StakingRewards.com, the top 261 staked assets provided an average of 11 percent annual yields. Thus, staking cryptocurrency also helps you establish a passive revenue stream.
    If you do not have enough cryptocurrency to stake coins independently, you could also join a ‘staking pool.’ As the name suggests, these platforms allow you to pool your resources (coins and computing power) with other stakers and participate in the staking process as a group. The rewards are then distributed in proportion to the amount of crypto you have staked in the pool.
    The last option for investors who have idle funds in their crypto wallets is to completely withdraw from the crypto ecosystem. They can transfer fiat money from their wallets into their bank accounts until further clarity is reached and the issue fizzles out.
    Although recent data is currently unavailable, industry estimates by Reuters indicate that the number of crypto investors in India ranges between 15 million and 20 million, with total crypto assets being held amounting to $5.25 billion. The current tax regime and the recent banking issues only discourage new investors from foraying into crypto markets whilst also triggering an exodus amongst existing crypto users. The country needs crypto-friendly legislation if the administration wishes to sustain this massive industry.
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