Crypto Quill

Introduction: Binance, the world’s largest cryptocurrency exchange, has recently made a significant policy change affecting traders in India. The exchange has decided to discontinue ‘cash deals’ for peer-to-peer (P2P) trades, specifically targeting those who used the rupee ‘cash option’ to avoid tax regulations. Let’s delve into the implications of this decision and its potential impact on the Indian crypto community.

The End of ‘Cash Deals’ on Binance

1. The Escrow Service and Tax Evasion

Until recently, local traders in India could utilize Binance’s ‘escrow service’ to facilitate P2P trades. This service allowed them to post buy or sell orders on the exchange platform and close transactions by making payments in Indian rupees. The flexibility to settle trades through physical cash delivery or bank deposits was particularly useful for evading taxes imposed by the Indian government on crypto transactions. However, Binance has now removed the ‘cash option’ for such trades, leaving traders with non-cash payment methods only.

2. Compliance and Legitimacy

Binance’s decision likely stems from its ongoing efforts to demonstrate higher compliance standards. The exchange has faced regulatory challenges in various countries, and adhering to local laws is crucial for its legitimacy. Purushottam Anand, founder of Crypto Legal, emphasizes the risks associated with P2P cash transactions. Traders have been physically assaulted during such meetings, and regulatory uncertainty often prevents victims from filing criminal complaints. Binance’s move aligns with the need for safer and more regulated crypto trading practices.

The UAE Exception

Interestingly, while the ‘cash option’ is no longer available in Indian rupees, it still exists for transactions involving the UAE dirham (AED). Binance allows buyers and sellers located in Dubai to settle payments in AED cash. Dubai is gradually positioning itself as a cryptocurrency hub, where cash and cryptos are freely interchangeable. Some developers even accept cryptocurrencies as payment, further enhancing Dubai’s status in the crypto world.

Binance’s decision to halt ‘cash deals’ for P2P trades in India reflects the evolving landscape of cryptocurrency regulation. While it may inconvenience some traders, it underscores the importance of responsible and compliant trading practices. As the crypto industry continues to evolve, exchanges like Binance must strike a balance between innovation and adherence to legal norms.