Dear readers,

Cryptocurrency trading in India could be a confusing subject. Yesterday we evaluated exchanges that offer INR-crypto markets in India and in continuation with the same, today we will compare the peer-to-peer exchanges available in India.

You can always go back to read the Crypto Exchange Comparison before reading about this by clicking here.

In today’s letter we will explore:

• Operational peer-to-peer exchanges that support Indian users.

• Scoring the exchanges based on their features like spread, payment methods, and tax compliance.

• Conclusion - Users can be guided to choose the crypto exchange

But, before we begin. I humbly request you to subscribe to this newsletter and join over 500 others who receive a letter every weekday in their inbox. It is free for a limited time.

Peer-to-Peer exchanges Supporting INR in India

In a peer-to-peer exchange, the platform allows buyers and sellers to connect with each other for a trade. For an order, the platform would escrow the funds from the seller, and transfer them to the buyer after both buyers and sellers mark the fiat transactions complete. A seller cannot receive the funds back until the buyer either cancels the order or the seller confirms receiving the payment.

In case of disputes, the platform usually has a resolution helpline that checks the chats, proofs of transfer, etc and resolves the issue.

The following platforms offer P2P trading to Indian users (sorted alphabetically):

• Binance

• Bitbns (Bitbns markets are shut)

• Huobi

• Kucoin

• LocalBitcoins

• LocalCryptos

• OKX

• Paxful

• WazirX

We will evaluate each exchange based on the features of its platform. Each feature gets one of the three scores: (-1), Zero (0), or (+1)

• (-1): Awarded when a feature is not available on the exchange but is available on many other exchanges. Example: If 5 out of 7 exchanges allow Crypto Withdrawals. The two platforms that do not offer the feature get (-1).

• Zero (0): Awarded for a missing feature that may or may not be available in a few other exchanges.

• +1: Awarded for each available feature irrespective of its availability on other platforms.

Caveat: An extra point is given to the exchange with one unique feature that sets it apart from others.

Let us begin in alphabetical order. We will evaluate each exchange for the features like no. of crypto assets supported, payment methods, TDS compliance, Price spread and KYC of the users.

We will not be able to judge any exchange’s dispute resolution, as they differ from platform to platform and we will have to try and cheat some users to test the platform’s service.

Here's a cheat sheet, if you do not feel like reading the whole thin

Binance

Binance launched its P2P exchange with support for INR in 2020. It is clearly the market leader in the segment across the globe, but how well does it fare in India?

• Cryptocurrencies that can be traded in INR: USDT, BTC, BUSD, BNB, ETH, ADA, TRX, SHIB, MATIC, WRX, XRP and SOL (+2) - extra point for the highest number of assets.

• Payment methods supported:

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source responsibility: User (0)

• Price spread: ~2% (0)

• Mandatory KYC: Yes (+1)

Additionally, Binance P2P markets also show users’ stats like the number of orders completed, the rate of completion, whether they are a merchant, etc.

Mandatory KYC also gives security to users that the buyer/seller on the other side is not a scammer. However, scams do happen, and people do get cheated, so please be careful.

Total Score: 5 points

Sign up for Binance P2P by clicking here.

Bitbns - Markets inactive

Update: Bitbns P2P markets are inactive, hence the below valuation does not apply.

Bitbns launched the P2P USDT exchange shortly after WazirX in 2018. The service was primarily used for users to deposit funds into Bitbns exchange and then convert it to other cryptocurrencies from the spot markets. The functionality became less and less used once the RBI banking ban was removed in 2020 by the Hon. Supreme Court of India.

• Cryptocurrencies that can be traded in INR: USDT (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~10% (-1)

• Mandatory KYC: Yes (+1)

The Bitbns P2P market looks almost deserted with users placing buy and sell orders for USDT at a 10% spread. The order books are also quite thin. The good thing for security is that all users are verified.

Total Score: 3 points

Sign up for Bitbns P2P and Spot trading by clicking here.

Huobi

Huobi established its P2P market supporting INR in 2018.

• Cryptocurrencies that can be traded in INR: USDT, BTC, ETH, HT, EOS, HUSD, XRP & LTC (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~2% (0)

• Mandatory KYC: Yes (+1)

Huobi Market has 8 cryptos for P2P trading with INR. The market spread is around 2%, which is within an acceptable range but it is not good. Zero fees and KYC are good additions.

Total Score: 4 points

Sign up for Huobi by clicking here.

Kucoin

Kucoin also opened its P2P market for INR around the same time as others. Users can trade 5 crypto assets on the Kucoin Crypto marketplace.

• Cryptocurrencies that can be traded in INR: USDT, BTC, ETH, KCS & USDC (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~4% (-1)

• Mandatory KYC: Yes (+1)

Kucoin Market has 5 cryptos for P2P trading with INR. The market spread is around 4%, which is not good and the liquidity is quite less.

Total Score: 3 points

You can sign up on Kucoin by clicking here.

LocalBitcoins

LocalBitcoins(LBC) is possibly the oldest operating Bitcoin peer-to-peer exchange which was revamped recently. In the early days, people could even trade bitcoins with cash on the platform.

• Cryptocurrencies that can be traded in INR: BTC (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~2% (0)

• Mandatory KYC: No (0)

LBC has one of the highest liquidity in the bitcoin P2P marketplace. LocalBitcoins also charges a 1% fee from the seller, which can be heavy, as many of the above-mentioned exchanges have zero fees. LBC is operational in 190 countries.

There are multiple layers of KYC, and users can simply provide details like email and phone numbers to trade up to 1000 EUR in a year. Non-KYC users increase the risk of getting scammed.

Total Score: 3 points

You can sign up to LocalBitcoins by clicking here

LocalCryptos Non-Custodial P2P Exchange

LocalCryptos is just another crypto P2P Exchange that was originally built for Ethereum only but now supports more assets. LocalCryptos is one of very few non-custodial P2P Exchanges, hence their wallets are in the control of the users.

• Cryptocurrencies that can be traded in INR: BTC, ETH, LTC, DASH & BCH (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~3% (0)

• Mandatory KYC: No (0)

The most amazing feature of Localcryptos is its service is non-custodial. I can always back up my wallet’s keys and transfer funds from it without using the website.

Total Score: 4 points (one additional for being Non-Custodial)

You can sign up on LocalCryptos.com. This is not a referral link.

OKX

OKX (formerly OKex) is a major crypto exchange in the world. Besides P2P, it offers spot trading, derivates, staking services and more.

• Cryptocurrencies that can be traded in INR: USDT, BTC, USDC, TUSD, ETH, GUSD and DAI (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~1.5% (0)

• Mandatory KYC: Yes (+1)

The best feature of the exchange is less spread compared to other exchanges but the liquidity is less on markets other than USDT.

Total score: 4 points

You can sign up on OKX by clicking here.

Paxful

Originally created and operated as a marketplace for Bitcoin only, Paxful has evolved to support USDT and ETH as well. Paxful is popular for having over 350 payment methods including gift cards.

• Cryptocurrencies that can be traded in INR: USDT, BTC, ETH (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: User (0)

• Price Spread: ~1.5% (0)

• Mandatory KYC: No (0)

One of my personal worst experiences of Paxful historically has been the scammers trying to scam me of small amounts like 1000 or 2000 INR. This happens as Paxful allows Non-verified users to trade small amounts of crypto without KYC.

Total Score: 3 points

WazirX

WazirX launched the P2P USDT exchange shortly after RBI’s banking restrictions came in place in 2018. The service was primarily used for users to deposit funds into WazirX exchange and then convert it to other cryptocurrencies from the spot markets. It is still one of the most popular P2P Exchanges in India

• Cryptocurrencies that can be traded in INR: USDT (+1)

• Payment Methods Supported?

  • UPI: Yes (+1)

  • IMPS/NEFT/RTGS: Yes (+1)

• Tax Deduction at Source Responsibility: Exchange (+1)

• Price Spread: <0.5% (+1)

• Mandatory KYC: Yes (+1)

WazirX is the only P2P Exchange that handles the TDS on crypto at the platform level. This gives the exchange a full score as the spread is also less with high liquidity.

Total Score: 6 points

You can sign up on WazirX by clicking here.

That concludes our comparison of peer-to-peer exchanges in India. Let us know in the comments below what you think.

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Read our comparison of Crypto Exchanges

The above score and updates are based on the status on exchange websites/apps on August 11, 2022. Some services may temporarily go down on these exchanges and hence disrupt the service.

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I know readers, now you are wondering what to do with the Tax part of the equation. How does one deduct TDS on a P2P exchange? What are the implications of not complying? Rest assured, once we have the answers from the right experts, we will publish the whole TDS process.

Affiliate Disclosure:

Some of the links shared above for crypto exchanges may be affiliate links. If you click on any of those affiliate links, sign up and trade within a certain time frame, I’ll earn a small commission. The commission is paid by the exchanges, at no cost to you. In some cases, you may even benefit from it.

I’m careful to link to products that I have used myself. Thank you for your support.