As one thing matures, mankind looks for more ways to twist and turn, so as to scoop out deeper. And so has happened with cryptocurrency. After its major launch in 2009 as a trading instrument, and after the market soon becoming brim with trading tactics and the best ways, people invented regulatory arbitrage to improve their trading success. But what it is, and how regulatory arbitrage can improve your trading success, is something that must not be ignored by any apt cryptocurrency trader today.
What is Regulatory Arbitrage
Regulatory Arbitrage refers to the simple practice of evading unfavorable rules and regulations related to cryptocurrency trading and profit making, by bending and twisting them in a manner so that, although they still remain in the purview of something legal, they tend to exploit the available gaps and escape clauses that exist. Furthermore, not only are firms doing this; with more and more private individuals venturing into cryptocurrency trading, stand-alone investors have also begun to undertake this practice of regulatory arbitrage to improve their trading success.
How Regulatory Arbitrage Can Improve Your Trading Success
If we talk in terms of counting the number of ways regulatory arbitrage can improve your trading success, these are innumerable! You just have to be more innovative and creative, and you just need to have some requisite knowledge about trading, taxation and finance in general. However, if we get to the ground and try to be more practical, it is not very easy to discover and then tap on these vulnerabilities that exist among the laws of cryptocurrency trading.
1. Geographic Relocation: This is one of the most common things that larger firms do to improve their trading success with regulatory arbitrage. They either relocate completely or split up their trades into two or more geographic locations, so as to reap the benefits of regulatory arbitrage by usually evading taxes and other costs associated with larger transactions.
2. Financial Re-engineering: Financial re-engineering refers to devising the profits and losses, and the resultant balance sheets, so as to make them the most profitable. It is like working your way in a bottom-up approach, re-designing everything afresh keeping the end target in mind, so as to get the maximum benefits. It is usually based upon advanced mathematical techniques and statistical models incusing economics.
3. Restructuring Transactions: This can be considered to be a sub part of financial re-engineering, wherein only the cryptocurrency transactions are restructured, rather than the whole of the accounts for a given entity or firm. The transactions are enlarged or contracted in a manner, so that they can improve your trading success, tapping the loopholes to capitalize on them, and to circumvent unfavorable regulations.
As an upshot, understanding and using how regulatory arbitrage can improve your trading success, can be a tough one to implement, even if you understand it well. A thorough knowledge of various crypto laws that prevail all around the globe is critical. As such it is better to hire experts like executium.com, to help you plan and strategize in the most efficient way, when you are trying to use regulatory arbitrage to further your profits, in a safe manner.