WazirX, one of the leading crypto exchanges in India, is set to introduce its own decentralized exchange, said Nischal Shetty, the co-founder of the crypto trading platform.
The decentralized platforms are totally different from the centralized setups, where the custody of customer’s cryptocurrency is given to exchanges and they manage who all can and can not open their accounts on the platform.
Decentralized exchanges do not need an intermediary organization for processing a transaction. Also, the platforms use self-executing smart contracts for processing trade.
According to the reports, WazirX is planning to launch the decentralized exchange in August 2021, presently it is being tested by the developers.
While explaining DEX’s feature, Shetty said, “Because a DEX (decentralized exchange) does not own the data, even the authorities can’t really go to the developer of the exchange and say I want the data.” However, he mentioned that if the authorities want, they can collect the data from the blockchain.
The recent development has come after WazirX found itself in the crosshair with the Indian authorities.
A month ago, the Indian crypto exchange received a show-cause notice, in which the Enforcement Directorate asked the crypto trading platform to explain transactions worth Rs. 2,70.74 crore on account of foreign exchange rules violations.
As per the report, WazirX is preparing a response to the federal agency that probes money laundering.
Recently, several legal and industry experts shared their views on decentralized exchange and they believe that legally, these kinds of trading platforms are less ponderous. Also, these exchanges provide greater transparency and control to crypto holders.
They further mentioned that it is difficult to hack and manipulate prices on the decentralized exchange.
The experts also believe that if the decentralized exchange starts its operation in India, then it may face fewer risks from the regulatory bodies in the country.
Mathew Chacko, a partner at Spice Route Legal, said, “From a global legal perspective, decentralized exchanges are seen as less of a legal problem than centralized exchanges. India, unfortunately, does not have any of this nuance in the law.”
He further stated that the central authorities can question decentralized exchanges but the platforms also have more ground to claim mitigation.
Akshay Aggarwal, the President at Blockchained India, also believes that the introduction of decentralized exchange would be beneficial for the crypto industry. He said, “The advantage is nobody can control your crypto. In most cases, it is one step more difficult for regulators to stop decentralized exchanges because they are owned by communities and not a small group of individuals.”
It is not important for anyone to be a citizen of a particular nation for using decentralized exchange, as it is globally accessible. Also, people can use it without undergoing any identification checks like ‘Know Your Customer.’
A month ago, the ED asked WaizrX, why it should not consider crypto withdrawals from the wallets, a violation of the foreign exchange policy of India. To this Shetty said that an increasing number of 7.5 million users on its platform, is generating interest in trading on the decentralized platforms.
The CEO of the crypto trading platform further said, “We know we can provide something which is more unique to a set of customers, especially those who probably use our product already but are looking for decentralization and have to go to a different brand.”