By reducing the surface area of the exchange, in terms of not directly dealing with deposits and withdrawals of Fiat, exchanges lose elements like speedy and predictable deposits and withdrawals, but lead to reduced compliance requirements against the local laws.
As crypto traders now for several years, everything went incredibly smooth for us; except for one thing — the exchange. They were either slow in processing accounts verification or delaying fiat currency deposits and withdrawals, all of which were critical to executing a perfect arbitrage.
When banks and governments strangled exchanges of API access, there were times exchanges had to enable deposits via Payment Gateways. This required users to pay up to 2.5% payment gateway charges on fiat deposits and sometimes on withdrawals too.
People we spoke too also spoke about Crypto being complicated as they had to deal with signing up, verifications, fiat deposits, limit order execution etc. Despite this, crypto trading in India reached a zenith where hundreds of Crores of Rupees were being traded on almost every day through November and December 2017.
Much like governments around the world, the Indian government has struggled to understand and classify such activities – whether in terms of store of value, goods or security. At the core, crypto is seen as a destabilization agent for Fiat issued by central banks around the world and is understandably not encouraged around the world.
Government responses can perhaps be summed up in a combination of the following responses:
- Require exchanges dealing with crypto to acquire suitable licenses depending on whether Crypto is treated as a store of value/ commodity or security.
- Require exchanges to adopt norms applicable to securities as followed by the securities regular in the country
- Apply existing cross border capital controls on the flow of crypto
- Require and enforce KYC and AML based controls
- Classify crypto as a commodity and apply indirect taxes on it
- Attempt to come out with a digital token which can be used as a proxy to Fiat
Despite a virtual crack down on crypto around the world, the crypto user base continues to broaden. Initially, the base was comprised of the geeks who were enamoured by the promise of decentralization and the blockchain, followed by early high risk appetite bearing investors.
Unfortunately, the latter part of 2017 also saw floods of naive speculators who got drawn in and drowned by by early 2018. 2018 has also seen the rise of the retail investor.
Retail investors like simplicity. And lengthy onramps on crypto weren’t helping.
The problem domain itself wasn’t new. When faced with similar challenges of access, solutions like ebay and Craigslist emerged as p2p 1.0 and later morphed into slicker first party feel platforms like airbnb.
Crypto, is going through this phase as well. At a bare minimum, a p2p crypto exchange manages in escrow one of the assets (frequently the digital asset) and allows money to directly change hands. On agreement of both parties, the assets are handed over to the buyer. In the case of a disagreement, the exchange typically steps in and provides a judgement on the transaction.
India is home to several such world class platforms. As an example, InstaShift. io, a global exchange, headquartered in Europe, is trying to reimagine a world where Crypto traders can buy/sell over the counter – much like a Macdonald’s experience as against a high-end restaurant experience.
Fast, Easy and Secure. InstaShift supports more than 80 crypto coins that you can trade with local currency in over 7 countries. The Flip service allows for quick and instant conversion between around 100 coins.
For More Information: Visit https://instashift.io/