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Indian crypto P2P market size triples despite regulatory uncertainty

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Even as fears of another blanket ban on India’s digital asset market linger on, peer-to-peer Bitcoin trading within the Asian powerhouse is still surging, hitting all-time highs over the first week of August.

This immense growth was initially spurred by the Supreme Court’s unequivocal decision earlier in March 2020 to repeal an unconstitutional circular imposed by the Reserve Bank of India forbidding local banks and various financial institutions from providing services to crypto exchanges and investors.

According to data aggregated by peer-to-peer Bitcoin (BTC) marketplaces Paxful and Localbitcoins, weekly trading volumes in India have been gaining ground consistently since April. For example, during the first week of August, BTC’s local trade quota stood at $4.4 million, a sharp increase from the $1.52 million weekly trade volume that was witnessed during the first week of January 2020.

Additionally, even during the month of March when the Supreme Court lifted the RBI ban and the sentiment of local crypto traders was at its peak, the highest recorded weekly P2P trade volume for BTC was around the $2.28 million mark.

Commenting on the rise of P2P trade in India, Nischal Shetty, CEO of Indian cryptocurrency exchange WazirX, told Cointelegraph that the 2018 restrictions imposed by the RBI made it difficult for Indians to convert rupees to crypto and vice versa. Since the ban was lifted, however, a number of crypto exchanges have been able to create direct banking channels for local currency deposits and withdrawals, thus contributing to the surge in P2P trade. Shetty added:

“With over $135 Million USD worth of P2P trades executed till now, our P2P volume is growing by over 33% every month! Our user signups and daily trading volumes are also increasing steadily ever since the Supreme Court of India struck down the banking ban on crypto.”

Exchange-based volumes outweigh those of local P2P platforms

As various P2P trading platforms continue to witness an increasing amount of mainstream usage, P2P trade volumes have also spiked across a number of Indian cryptocurrency exchanges. This increase in volume can be attributed to the overall positive sentiment surrounding the global crypto sector, reinforced by milestones such as United States banks being allowed to offer cryptocurrency custody services to their clients as well as various mainstream corporations entering the relatively nascent space.

Expounding his views on the matter, Ashish Singhal, CEO of CoinSwitch, an Indian cryptocurrency exchange, pointed out to Cointelegraph that P2P trade volumes on local Indian exchanges are easily surpassing those currently being witnessed across various other P2P platforms:

“During the first week of August, the combined trade volume on the top two P2P exchanges in India was about USD 4.4 million. In that same period, CoinSwitch Kuber alone facilitated 6.5 million USD in trading volume. So it can be safely assumed that a large portion of crypto investors make use of exchanges instead of P2P platforms.”

Lastly, on Aug. 5, prominent cryptocurrency exchange OKEx announced the launch of its peer-to-peer trading platform, which will allow Indian crypto enthusiasts to buy and sell BTC and USDT with zero transaction fees using Indian rupees.

While the announcement acknowledges the current uncertainty surrounding the Indian crypto ecosystem, OKEx CEO Jay Hao previously shared with Cointelegraph his firm belief that another blanket ban is unlikely: “We are willing to support our Indian partners and are hopeful that we can work with regulators to clarify their main doubts and issues with cryptocurrencies.”

Indian crypto experts are optimistic

Despite the Supreme Court ruling in favor of crypto earlier this year, Shetty firmly believes that owing to the fact that crypto is still a nascent technology, a number of myths and misinformation continue to surround the market at large. However, he is extremely optimistic that the Indian government will follow in the footsteps of countries like Japan, the U.S., the United Kingdom and Australia in regulating its local digital asset market.

Amid the devastation to the Indian economy by the ongoing COVID-19 pandemic, with many employees laid off across industrial sectors, crypto remains one of the very few sectors that continues to display sustained growth.

Thus, it could be in the Indian government’s best interest to help along the industry by creating the right regulatory environment instead of implementing a restrictive proposal titled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019,” which seeks to ban digital assets on the basis perceived negative use cases such as money laundering, terrorism financing and so on. However, Singhal is confident that after having learned about the actual utility of crypto and blockchain tech, the Supreme Court is highly unlikely to reconsider its current stance:

“Considering that a lot of positive developments have taken place globally since this bill was drafted, there is a very good chance that the bill will not get passed in its current form and if things go well.”

Singhal also pointed out that the Indian government has yet to clarify its stance on the legal status of the industry and whether the blanket ban is still possible. Meanwhile, officials have clearly stated several times that crypto is not on the same legal stature as the Indian rupee. However, this is not necessarily an anti-crypto stance, since most countries that regulate crypto also consider it an asset class instead of a currency.

DeFi gains momentum in India

As interest in crypto continues to rise, crypto exchange Binance announced on Aug. 24 that it will host a first-of-its-kind decentralized finance-oriented hackathon followed by an accelerator program in the country. Dubbed “Build for Bharat,” a spokesperson for the company stated that the goal is to bridge the gap between the blockchain sector and mass adoption of crypto in India.

As part of the hackathon, “special consideration will be given to various DeFi products that are related to mini-tokens, micro-financing applications, blockchain datasets, blockchain-AI solutions,” a company representative recently told Cointelegraph in an interview.

Meanwhile, WazirX announced on August 15 that it is devising its first decentralized finance offering in partnership with the Matic network. Shetty revealed that the offering is currently under development and that a testnet version of the product should be available by the second half of September. Speaking with Cointelegraph about the potential of DeFi tech, Shetty added: “After having made it easy for Indians to access crypto, we want to make it easy for billions of Indians to participate in the DeFi ecosystem.”

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CRYPTOCURRENCY

Demand for Bitcoin is growing high amid tightened supply

The amount of illiquid Bitcoin supply in the network has grown more than the circulating supply since 2017.

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Crypto experts argue that such strong demand in the Bitcoin market is largely attributed to the fact institutions are coming.

The market liquidity is tightening at the flagship Crypto market, as there are less than 4 million BTCs in circulation available for upcoming investors including the likes of  Grayscale, Paypal, Microstrategy, hedge funds, and so on.

Only 21 million Bitcoins are ever going to be produced in total, and presently, there is about 18.9 million Bitcoin in circulation.

This shows a differential of about 2.1 million Bitcoin that are left to be produced, not forgetting about 4.5 million Bitcoins that have already been lost forever.

This also means that liquidity is drying up, as demand for the world’s most popular crypto hits record highs

The amount of illiquid Bitcoin supply in the network has grown more than the circulating supply since 2017.

Meanwhile, liquid supply continues to see a steep decrease.

According to Yann & Jan:

“Float in the network is drying up faster than ever.
“Currently, about 78% of issued bitcoin’s are either lost or being hodled, leaving less than 4 million bitcoins to be shared amongst future market entrants (incl. Paypal, Square, SP500 Companies, ETF’s, etc).

It’s also important to understand Institutional investors love transparency, regulation meaning the more regulated Bitcoin mechanisms such as regulating Crypto exchanges handling it, the more value major institutions will place in it, thus making Bitcoin a less volatile asset in the long term.

Glassnode also revealed that a million Bitcoins (BTC) or almost $30 billion in actual prices, disappeared from the liquid supply in 2020. This process even outperformed the inflow of new Bitcoins (BTC) into the network:

“Currently, we are at a stage in which the illiquid supply is growing more than the total circulating supply according to the report. A similar pattern presently played out again during the bullish rally of 2017.”

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Cryptocurrency News

VP Osinbajo disagrees with CBN, calls for crypto regulation

Vice President Yemi Osinbajo had recently called for Crypto regulation knowing fully well the role Crypto play in the global financial ecosystem.

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The Vice President of Nigeria, Prof. Yemi Osinbajo has recently called for Crypto regulation knowing fully well the role Crypto plays in the global financial ecosystem as he opined that such disruption often makes room for progress.

Osinbajo also advised the SEC, and Central Bank of Nigeria in creating a regulatory road map, while fully appreciating the stance of the CBN, Nigerian SEC, and law enforcement agencies on the possible abuses of crypto assets.

The vice president further stressed the importance Cryptocurrencies would play in the coming years as they will most likely challenge traditional banking, including reserve banking, in ways the world hasn’t yet imagine, stressing the need for Nigeria in being prepared for such a seismic shift.

He also called for scaling up of government-private sector interventions because, “the task of national development requires that we fire on all cylinders, after all at one stage China was building 1.9m housing units per year.”

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CRYPTOCURRENCY

Coinbase executes over $1 billion Crypto trades for world’s biggest clients

The world’s most valuable crypto exchange revealed it has executed $1 billion-plus crypto trades for some of the biggest institutions in the world.

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In its  recently filed documents with the U.S. Securities and Exchange Commission, the world’s most valuable crypto exchange, Coinbase revealed has executed $1 billion-plus crypto trades for “some of the biggest institutions in the world.”

The leading American Crypto exchange, however, revealed its major objective remains to provide credible crypto services for both institutional and retail clients as crypto continues to expand across financial sectors, according to Coinbase SEC filing.

“Our goal is to become the primary financial account for our retail users and the one-stop-shop for institutions’ crypto-asset investing needs. To achieve these goals, we are developing and launching innovative products and services across our platform to serve each customer’s distinct needs. For example, in 2020 we launched support for post-trade credit to enable institutional customers to instantly invest in crypto assets without pre-funding their trade. For retail users, we have added support for staking, offering our users a simple way to earn rewards on their crypto asset holdings.”

Recall, the fast-rising American crypto exchange financials revealed the crypto startup grew rapidly from 2019 to 2020.

Coinbase was founded was about 9 years ago and allows its customers to buy and sell Crypto Like Bitcoin, Ethereum Polkadot. The fintech company had earlier raised over $540 million in funding as a private company.

In 2019 Coinbase’s net income was- $30.4 million against $533.7 million in revenue. Just last year the crypto juggernaut net income rose to $127.5 million against $1.28 billion in revenue.

The unicorn grew just over 139% in 2020, a massive improvement in its 2019 results.

In an IPO filing, Coinbase says “Address not applicable” in the spot companies usually list their headquarters.

In a footnote, it explains “In May 2020, we became a remote-first company. Accordingly, we do not maintain a headquarters.”

As a risk factor, it cites: “The identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins.”

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