Exciting arbitrage opportunities for cryptocurrencies in India now

Just few months back when bitcoins started making news touching the price of gold, the Indians woke up and started the bitcoin momentum in India, though the respective Indian startups have been around since 2014. Like every one, I too wished, should have bought it much earlier to reap benefits today but , discovered some exciting arbitrage opportunists in this space during my learning curve.

Bitcoin in India from any of the Indian exchanges (and even in local bitcoins often) costs a premium. About $150 above international prices minimum. This should allow us a good profit margin to buy in International exchange and sell in India. Check out the below comparison between buy at Intl market Bitfinex and sell at Indian market (here Coinsecure).

The chart is in INR or ₹ but a 10000 INR should translate to about 150 USD. But this is not without hurdles. Till the time of writing, I could not do this yet. The problem is on both sides. In Intl exchanges, its the verification delay, and some exchanges like bitfinex freezing wire deposits. It took about a month almost to properly get verified and ready for wire transfer.

These are all OK. You see, the main problem is in the Indian side. Due to money laundering fears, the outward remittances are too much restricted in India for wire transfer. And Wire transfers are typically cheapest (though also slowest) compared to credit/debit cards.

Approach any 3rd party services or banks, they always ask you the purpose and it is expected to be some of the following: Education, Emigration, Business travel expenses, Conferences, Visa fees, Tickets, Money for blood relatives, etc.

The RBI LRS scheme clearly says, capital transactions, that is allowing Indians to diversify their investment abroad is allowed up to around $250000 per year . Here is the link. Check Point 6.

https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10192&Mode=0

But we do not know yet if bitcoin could fit there. And not many government netas (the term we used to call because they feel themselves very superior to common citizen), are aware or too afraid of the same. Drop the term bitcoin as purpose, and they would stare at you like a criminal. This is a bane in India. With enough money and connections, the millionaires would go unabated, netas would "adjust" all means to achieve their target. But be a common man, approach legal means, and you would face enormous hurdles and suspicion. This is a country where Vijay Mallya who has 9000 crores loan unpaid to banks can escape but poor farmer with 1 lakh will have to suicide due to harassment.

It is because of this hurdles, common man in India are unable to leverage these arbitrage opportunities, but am sure, the Indian millionaires would be already using it.

Current working method (though you would actually lose money) is you need to set up a virtual international credit card account (which has deposit fee of around 5%) because many Indian cards do not work on international platform. Then when you buy using cards, the exchange typically charges between 3% to 5%. And then comes bitcoin transfer fees. With a test amount of 7000 INR in this route, I get back only 6500 INR.

And yes, it is funny, while you could outward remit via card (though with large fee), you are restricted via wire transfer.

Kindly share your views on such opportunities, how you managed to over come them, and about such opportunities world wide. I know we have arbitrage opportunities between Intl exchanges, but their margins are too less, which could be eaten up by the fees in transactions itself.