P2P cryptocurrency trading - what is it, how does it work and how to make money from it?

P2P trading (or peer-to-peer) of cryptocurrencies is a way of buying and selling cryptocurrencies directly between users, without intermediaries. If you've wanted to buy or sell virtual assets but are unable or unwilling to use traditional exchanges, P2P platforms may be just the perfect solution.

In this article we will look at what P2P trading is, how it works, whether it is legal in Ukraine and, of course, how to make money on it.

What is P2P cryptocurrency trading and how does it work?

P2P trading is a form of trading where transactions are made directly between users. Unlike conventional exchanges, where all transactions are automatically performed through the trading platform, here you can directly negotiate with another person about the terms of the transaction.

The process looks like this:

1. Choosing a platform: you register on a P2P platform such as Trustee P2P or another.
2. Choosing an offer: you choose a suitable offer to buy or sell from another user. They usually differ in price, amount of cryptocurrency and payment methods.
3. Transaction: after agreeing on the terms of the transaction, the buyer sends payment to the seller (for example, via bank transfer) and the platform temporarily blocks the cryptocurrency in the seller's account to guarantee the safety of the transaction.
4. Completion: after confirming receipt of payment, the seller unlocks the cryptocurrency, which goes into the buyer's account.

This type of trading saves on bank fees and allows for greater privacy.

Example

As of August 20, 2024, the cash dollar exchange rate at Monobank is 41.20 UAH per 1 USD. If you want to take advantage of this exchange rate difference to earn money by buying and selling cryptocurrency on a P2P platform, you need to do the following:

1. Finding a favorable offer on a P2P platform: you register with Trustee Plus and find the best offer to buy USDT. The seller offers you to buy it at the rate of 39.80 UAH per 1 USDT.
2. Buy USDT: you decide to buy 1000 USDT, which will cost you 39,800 UAH (1000 * 39.80 UAH/USDT).
3. Selling USDT for fiat dollars: after successfully receiving USDT in your cryptocurrency account, you look for an offer on another p2p platform to sell these USDT for dollars. You find a buyer who is willing to buy your USDTs for 1.01 USD for each USDT. Now you sell your 1000 USDT for 1001 USD (1000 * 1.01 USD/USDT).
4. Conversion of dollars into hryvnias: you decide to exchange your 1001 USD into hryvnias using the services of the same Monobank, where the exchange rate is 41.20 UAH/USD. Your final income is 41,241.20 UAH (1001 USD * 41.20 UAH/USD).
5. Calculation of profit: your initial costs amounted to UAH 39,800 and your final income is UAH 41,241.20. Therefore, your net profit is 1,441.20 UAH (41,241.20 UAH - 39,800 UAH).

So, taking advantage of the difference in exchange rates, you earned UAH 1,441.20 on a single trade using P2P trading. This is a real example of how you can effectively use P2P platforms like Trustee Plus to make profits.

Is P2P trading legal in Ukraine and how does it affect taxes?

With the onset of the full-scale invasion of the Russian Federation in February 2022 and the imposition of martial law, the National Bank of Ukraine (NBU) introduced a number of restrictions, including a ban on cross-border currency transfers and limits on cash withdrawals. These measures were aimed at ensuring the stability of the financial system, but the traditional financial system was unable to fully address the problems that arose.

However, despite this, Ukrainians continued to actively use cryptocurrency, especially in the format of P2P transfers.

It is important to note that according to part 2 of Article 19 of the Constitution of Ukraine, the country has a general permissive principle for individuals - everything that is not expressly prohibited by law is allowed. Since the use of cryptocurrencies is not prohibited by Ukrainian law, it is considered authorized for individuals. This creates a legal basis for the legal use of cryptocurrencies, including P2P transactions.

Nevertheless, the law “On Virtual Assets”, adopted in February 2022, has not yet entered into force due to the need to amend the Tax Code. The main purpose of this law is to regulate the circulation of virtual assets, such as cryptocurrencies, and to create a legal framework for their legalization and use.

As far as p2p trading (peer-to-peer) is concerned, this law is important because it defines the legal status of virtual assets and establishes rules for their circulation. That is, it would have to answer the question whether p2p trading is legal in Ukraine. 

Why use P2P at all

P2P payments provide an opportunity to make money through arbitrage, where users buy cryptocurrency at a lower price on one platform and sell it at a higher price on another. This method becomes especially profitable during periods of high market volatility. In addition, P2P trading allows currency to be exchanged directly between users, bypassing banks and their commissions, making the process faster and more profitable.

Another advantage of P2P is access to favorable exchange rates, as users set the terms of the transactions themselves. This makes it possible to get better deals than those provided by banks or exchangers. In addition, P2P transactions remain confidential and are subject to less scrutiny from government agencies, which is important for financial privacy.

How can earn from P2P trading?

Earnings from P2P trading are mainly based on the principle of arbitrage - buying cryptocurrency on one platform at a lower price and selling it on another platform at a higher price. This makes it possible to profit from the difference in exchange rates. To successfully engage in arbitrage, you need a starting capital, at least a few thousand dollars, because to get a tangible profit you need to make significant volumes of transactions.

To begin with, you need an active bank card, for example, PrivatBank or Monobank, through which you will deposit and withdraw funds. In addition, many arbitrageurs use so-called “money mule” (people who provide their bank accounts for transactions) to avoid restrictions on the number of transactions or attention from the bank.

Arbitrage starts with finding a favorable rate on one of the popular platforms in P2P crypto such as Trustee, Binance, KuCoin or Bybit.

For example, you can buy USDT for UAH on Trustee Plus at a rate of UAH 40 per crypto dollar. Then you move to another platform, say Bybit, where the selling rate is 41 hryvnia. You sell USDT, receiving hryvnias, and lock in a profit. Conditionally buying 1000 USDT for 40,000 hryvnias and selling them for 41,000, you get 1000 hryvnias of net profit.

It is important to take into account transfer fees and possible transaction delays. The faster you make transactions, the higher the probability of fixing a favorable rate, as the cryptocurrency market rate can change quickly. 

To be successful in arbitrage, you need to carefully monitor the market, have access to several P2P exchanges of cryptocurrencies and be ready to react quickly to changes in the rates.

How to trade on Trustee - instructions

You can trade on the P2P platform built into the Trustee Plus app, which provides a convenient and secure exchange of cryptocurrency for UAH directly between users, without intermediaries.

Here's how it works:

Step 1: Download the app

First, install Trustee Plus on your device (available for iOS and Android). After that, log in or register a new account.

Step 2: Select an offer

Go to the P2P section of the cryptocurrency platform in the app. Here, you will see a list of available options to buy or sell cryptocurrency. You can use the built-in Smart P2P, which will automatically select the best offer for the cryptocurrency of your choice, or you can select an offer yourself based on the exchange rate, amount, and the performer's rating.

Step 3: Confirm the deal

After selecting an offer, click on it and review the details of the deal. If everything is satisfactory, confirm the transaction and follow the further instructions in the app.

Step 4: Execute the transaction

According to the instructions, make the payment or wait for the transfer of funds from the other user. The exchange process usually lasts no more than 10 minutes, after which you will receive the funds either in cryptocurrency or on your bank card, depending on the terms of the transaction.

Benefits of Trustee P2P

• No commissions: P2P trading on Trustee Plus does not include any additional commissions.
• Security and speed: All transactions are secured and the execution time is up to 10 minutes.
• Executor selection: You can choose who to trade with based on the ratings on the platform.
• Fast dispute resolution: In case of any disputes, the platform support will quickly resolve them.

Trustee P2P is a convenient way to conduct financial transactions with cryptocurrency without unnecessary complications and commissions. 

Now that you know what p2p trading is, you can choose favorable conditions for yourself and start such activity right now.