Cryptocurrency is an asset class that operates without a central regulatory authority. It is decentralised, and that is its USP. But uninitiated often pose a crucial question: How to convert the digital asset into a feat currency like Indian Rupee? Here is how you can do it.
Cryptocurrency Exchanges: These offer a user-friendly way to sell cryptocurrencies and credit Indian Rupee (INR) into your bank account. However, they charge fees and may face regulatory issues.
P2P platforms: Trade directly with buyers, often with lower fees and flexible payment methods. Beware of scams and complexity of dispute resolution.
ATMs: Crypto ATMs provide a quick way to get cash, but are not widely available in India and often have high fees, says Sathvik Vishwanath, Co-Founder & CEO at Unocoin.
Let us explore the methods for cashing in cryptocurrencies in detail:
Using centralised exchanges
Centralised exchanges are one of the most common methods for converting cryptocurrencies to cash. Platforms like Coinbase, Binance, and Mudrex allow users to easily sell their digital assets. To use an exchange:
Users must first register on the exchange and complete any necessary verification processes.
After setting up an account, users deposit their Bitcoin or other cryptocurrencies into the exchange wallet.
Users can then place a sell order at a specific price or opt for a market order to sell at the current market price.
Once the sale is completed, users can withdraw the cash to their linked bank account.
Peer-to-Peer (P2P) platforms
It is a direct approach for those seeking a more direct method, P2P platforms like LocalBitcoins and Paxful connect buyers and sellers directly. These services allow users to trade cryptocurrencies for cash through various payment methods, including bank transfers, PayPal, or even in-person cash transactions.
Users can browse listings to find potential buyers.
Users can negotiate the price and payment methods, which may include bank transfers, cash payments, or other methods.
Once an agreement is reached, users complete the transaction.
Peer-to-peer exchanges (P2P) VS Centralised crypto exchanges
Peer-to-peer (P2P) exchanges and centralised crypto exchanges have two distinct approaches to cryptocurrency trading.
P2P exchanges facilitate direct transactions between users without intermediaries. They typically offer greater privacy, global accessibility, and often lower fees. Users have more control over their funds and can negotiate terms directly with trading partners.
However, P2P platforms may have lower liquidity, longer transaction times, and require users to exercise more caution to avoid scams.
Centralised crypto exchanges, on the other hand, act as intermediaries between buyers and sellers. They usually provide higher liquidity, faster transactions, and a more user-friendly interface. These exchanges often offer additional features like advanced trading tools, fiat currency support, and customer service. However, they require users to trust the exchange with their funds, may have higher fees, and can be subject to regulatory scrutiny or hacking attempts. Users also typically need to complete identity verification processes, which can compromise privacy.
Crypto ATMs
Crypto ATMs provide a physical option for converting cryptocurrency to cash. These machines allow users to buy or sell Crypto. Crypto ATMs typically charge higher fees compared to online methods. To use a Crypto ATMs follow the steps:
Locate a nearby machine. Users can find nearby ATMs using online maps or dedicated apps.
Follow the on-screen instructions to initiate a sale.
Send your cryptocurrency to the provided address.
Collect your cash from the machine.
Considerations while investing in Crypto currency: Stay informed of evolving regulations and tax implications as crypto transactions are subject to Indian laws and taxes. The gains from trading cryptocurrencies are subject to tax at 30 per cent (plus 4 per cent cess) as per section 115BBH
The Reserve Bank of India (RBI) had urged retail investors to exercise caution while investing in cryptocurrencies, warning that the crypto ecosystem lacks accountability and stability and is marked by regulatory ambiguity.
First Published: Aug 13 2024 | 11:57 AM IST
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