Binance has discontinued cash payments for peer-to-peer (P2P) cryptocurrency trades in India.

This decision comes as a result of the exchange's effort to establish greater legitimacy in the Indian market despite the previous flexibility allowing traders to settle transactions using physical cash or bank deposits.

Binance Termination of Service in India

Binance, one of the leading global cryptocurrency exchanges, has stopped allowing cash payments for peer-to-peer (P2P) cryptocurrency trades in India. This change affects standard payment options such as online funds transfers and UPI, as well as a popular method by which investors can carry out transactions using physical cash or by depositing funds into a bank account.

Previously, local investors could take advantage of Binance's escrow service to post buy or sell orders on the platform and complete transactions using a variety of payment methods, including cash. This flexibility was particularly advantageous for circumventing the high taxes that New Delhi imposes on crypto trading.

The decision to end the cash payment option is part of Binance's broader strategy to increase compliance and gain legitimacy in the Indian market, where regulatory scrutiny is increasing.

While non-cash rupee payment methods are available for P2P trading, the removal of the cash option represents a significant change in Binance's operational approach in India.

Interestingly, Binance continues to allow cash payments in UAE dirham (AED) for P2P trades. This allows the exchange to match buyers and sellers in Dubai and facilitate payments in AED cash.

In Dubai, where exchanges between cash and cryptocurrencies are more fluid, the city is positioning itself as a thriving cryptocurrency hub. Some developers even accept cryptocurrencies for payments.

Purushottam Anand, founder of Bengaluru-based blockchain and crypto-focused law firm Crypto Legal, highlighted the risks associated with P2P cash transactions.

“These transactions expose the parties to serious physical and financial risks. There have been incidents where traders have been hacked during physical meetings and forced to transfer virtual assets or hand over cash. Regulatory uncertainty around the legality of such cash transactions, especially amounts exceeding ₹2 lakh, deters victims from filing complaints and makes them vulnerable to fraud, Anand said.

Despite this, it was alleged that Binance was not technically violating Indian law as it acted as a third party providing escrow services for cryptocurrency transfers that are not recognized as legal tender in India.