CoinSwitch starts cross-exchange trading platform

Homegrown crypto unicorn CoinSwitch has launched CoinSwitch Pro, a cross-exchange crypto trading platform that will let users trade crypto tokens across multiple exchanges without the need to log in to each exchange separately. The platform has three exchanges listed so far.

In an interview, Ashish Kumar Singhal, co-founder and chief executive officer of CoinSwitch, said the multi-exchange platform is an answer to recent issues of liquidity in centralized crypto exchanges, highlighted by the bankruptcy of one of the world’s largest crypto exchanges, FTX. CoinSwitch will charge users a transaction fee for trades executed on the platform, which will differ based on the exchange the user chooses.

The platform offers users the ability to view and select token prices across exchanges, while also displaying the 24-hour trading volume and value— thus reflecting liquidity of each platform.

“Alongside liquidity, since the service lists price differences of tokens across exchanges, a cross-exchange platform will also allow users to make the most of arbitrage —thus buying tokens on one exchange and selling on another,” Singhal said. Arbitrage is the act of buying an entity at one place such as an exchange and selling at a higher price in near-instant time durations on a second exchange, thus earning slim-margin profits. Regular equity investors typically look at algorithmic trading as ways to earn through arbitrage.

To be sure, exchange aggregation for crypto trades is not new. Sidharth Sogani, founder and CEO of crypto market analysis firm Crebaco, said exchanges in India typically execute any fiat currency crypto purchases out of their own liquidity pool, and tap larger global exchanges for liquidity for “crypto-to-crypto transactions, such as USDT to BTC”.

“In such a model, a smaller exchange typically pays a share of their exchange fee or commission with the larger exchange, which they tap to access token liquidity. This is a commonly established practice, and this is what cross-exchange trading for crypto in India may enable for more exchanges going forward,” Sogani said. He, however, said it remains to be seen how cross-exchange trading is regulated in the long run, especially once India’s official cryptocurrency regulations are established.

“Keeping a track of how transactions flow across exchanges in line with the money laundering inspections that have been recently conducted across crypto exchanges is going to be a key area that a future regulator will likely be cautious about,” Sogani said.

In response, an official from Coinswitch said any user or law enforcement body will be able to “view exchange level transactions, on the platform’s order history page.” The official also added that all transaction data is stored since account creation, and is maintained electronically for transparency of how transactions flow across exchanges on CoinSwitch Pro.