When joining any trading environment, it is required to understand the details of the marketplace before entering. You’ll need to know what kind of exchange you are getting into and if that particular place is available in your country. Below, we’ll list the most common types of exchanges out there and the specifics from country to country.
Types of Exchanges
Luckily for the new user, only 3 basic kinds of exchanges exist. If you have traded in stocks or bonds before, you will notice that a few may be similar, such as for FOREX or binary options offerings. Each have their own benefits and downsides, so it is imperative to choose the option that makes the most sense for you.
Buy – Sell Bundle
These platforms are the best for newcomers to the industry. At these marketplaces, one can buy or sell cryptocurrency in any amount. Prices are provided as a static amount by the exchange, so there are no surprises when engaging in this type of buying and selling. Places such as Coinbase and CEX.IO have this immediate buy or sell functionality.
To get started, make an account with one of the aforementioned websites, upload your native currency of choice via credit / debit card or bank transfer, and follow the point-and-click method of purchasing. The only con of this method is that the exchange usually charges higher amounts for the convenience of buying so easily.
Regular Trading Platforms
This is the most common type of platform and the one which is used most frequently around the world. If you are familiar with traditional trading, then this option will be familiar. Once an account is registered and is funded with either your cryptocurrency of choice or fiat, you will be able to engage on the marketplace.
You can either buy or sell on the platform and view your order in the order book. Orders get matched based on price and quantity. Once the exchange is completed, the website takes a small cut of the total transaction amount as a fee.
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Peer-to-peer Exchanges
Peer-to-peer exchanges work in a friendly, anonymous way. That means no registration is necessary. With this method, two parties engage directly in a trade of Bitcoin or similar cryptocurrency. For example, in LocalBitcoins the user indicate their preferred buy/sell price on the exchange, and a program automatically matches two people together.
If both parties agree to the trade, they pay a deposit into an escrow account which is refunded once the transaction is completed. The two players in this scenario then fulfil their transaction steps. The escrow then charges a tiny fee for its payment service.
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Regulation of Cryptocurrency Trading Worldwide
Legislation against Bitcoin and other cryptocurrency—both in the trading and spending aspects—has been ramping up in the past few years. Countries which have already outlawed the use of Bitcoin include: Morocco, India, Taiwan, Iceland, amongst others.
China, for example, has banned trading on in-country exchanges and is planning to release legislation which will further restrict the use of Bitcoin. Russia, too, is in the same boat and is drafting bills to regulate Bitcoin. Even in places such as the United States, users are forced to pay a percentage of cryptocurrency gains to the government because it is classified as an asset.
The USA
The United States has not banned or regulated virtual currency in any way shape or form. That is to say, on a federal level, exchanging or spending cryptocurrency is not illegal or restricted. However, the Internal Revenue Service has classified these currencies as an asset or a property.
While there is a huge debate over this classification, this means that citizens are required by law to report the net gains or losses from each individual transaction. On any gains, taxes are to be paid. Although this is the case, many people get away with not reporting if the amount is less than $10,000 or they are using the anonymity of cryptocurrency to go under the radar.
The UK & Europe
![bitcoin ligality in europe](/wp-content/uploads/2018/05/earth-globe-symbol.png")
Both the UK and EU have dedicated resources to providing stability to the cryptocurrency scene. Foremost, there is proposed legislation to require individuals to disclose their personal information when trading virtual currency. The intent is to combat fraudulent activity, but many suggest that it defeats one of the core aspects of crypto.
The UK in particular seems to be more lenient with the subject, as they have been more willing to inherit the underlying blockchain technology. While there are taxes and some legislation in place, the UK stands to benefit from virtual currency. The EU, on the other hand, is more strict on the matter, with their top commissions specifically stating that regulation of cryptocurrency is a top priority in the coming year.
Asia
Overall, countries in Asia seem to be the most skeptical of cryptocurrency as a whole. While not totally banning virtual currency as these countries wish to protect their people’s free will, they have been more conservative with their legislation to protect users. For example, China banned the popular ICO movement to protect against fraud.
Additionally, the country closed domestic exchanges and halted Bitcoin mining production for similar reasons. Much like China, South Korea has denounced ICO’s. Also, the country has begun to investigate trading firms for compliance regulations and will soon introduce new legislation that will require registration of personal information in order to trade.
The news isn’t all bad for Asia. Japan, for instance, has allowed a dozen exchanges to operate within its borders. Although they are stricter than most western countries, the approving of specific marketplaces indicates that Japan wants good protections in place for citizens.