India, home to a rapidly growing crypto and Web3 market, is witnessing a wave of experiments being undertaken by members of the crypto community. Over-the-counter (OTC) crypto trading is one such process that seems to have gained steam in recent times in India. OTC trading creates a trading market where two parties — the buyer and the seller — negotiate conditions of the trade without any exchange. OTC trading usually interests large investors because the trades are settled outside the ecosystem of the exchanges.
In OTC crypto trades, agencies or individuals carry out transactions on behalf of the traders, off the books of the exchanges. The concept has been emerging as a topic of interest on social media in India as traders can use it to move around cryptocurrencies without any paper trail. Some can even use it to evade the taxes that India levies on crypto incomes and transactions.
As part of traditional financial practices, OTC trading of regular assets have been facilitated by banks for years. The services now include OTC crypto trading, which is also being facilitated by some exchanges in India, including WazirX.
In conversation with Gadgets 360, Rajagopal Menon, Vice President, WazirX, explained how OTC crypto trading is processed. “So our OTC desk had a minimum limit of 50,000 USDT. If you wanted to execute trades you could tell our OTC managers that you want to either buy or sell for your choice of amount and offer a rate, usually there would be a difference to the exchange rate since this is bulk order. Once the rate is determined, the OTC manager would talk to the different sellers listed with us and ask if the rate was acceptable. Following some negotiations, the OTC crypto trade could finally take place account to account,” Menon said.
Along with WazirX, OTC crypto trading is also offered by ZebPay, CoinDCX, and Giottus to Indian invetsors. Infact, when ZebPay launched OTC crypto trading in India, the company reportedly claimed it did so owing to a huge demand from Indian investors.
Unlike trading in crypto assets via exchanges, OTC crypto transactions provides better privacy, higher transaction limits, and a getaway from market volatility that makes the crypto sector infamous.
Insiders from India's crypto industry believe that the rise of OTC crypto trading in India will increase the financial inclusion of this user base while also making the disbursement of funds much faster.
“The crypto portfolio of the 100 million digital asset holders in India will add to their creditworthiness and add a huge pool of potential customers for the bank. With the use of smart contracts, the banks can choose to leverage the full capabilities of blockchains and automate the release of funds based on time or verifiable milestones,” Ankur Grover, CEO of Zoksh Pay, told Gadgets 360.
Launched in 2021, Zoksh is a non-custodial payment solution that lets businesses accept over 1,000 cryptocurrencies across 16 blockchains.
These trades happen without any paper trail, enabling customers to trade massive volumes of crypto while escaping the taxman's net. :star2: pic.twitter.com/4stZkaSFWw
— The CapTable (@thecaptableco) July 5, 2023
Zeroing-in on how OTC crypto trading could help India's economy, Grover said that the moment crypto assets are collateralised, the process adds a lot of liquidity into the market.
“Blockchain technology is more secure compared to the traditional tech by multiple orders so banks could save costs on security. A simple crypto wallet with a layer of KYC can act as your banking app so the penetration into market where everyone has a smartphone can be much easier and cheaper. With this, reaching the unbanked would be much more efficient,” Grover noted.
Whenever India finally gets its set of crypto rules, experts believe, OTC crypto trading could become a common practice among investors.
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.
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