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India is obsessed with Bitcoin, the top cryptocurrency exchange states

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The role of the Covid-19 pandemic in encouraging a once-in-a-decade influx into India’s stock market of new retail investors has captured headlines. Indian retail investors pursued the enormous recovery in equity markets with time on their side and deposits in their bank accounts. However,stocks were not the only asset class they were chasing.

They were also minting Bitcoins with capital. A lot more cash!

“We saw an even higher number of individuals coming in when the pandemic lockdown began,” said Nischal Shetty, Founder and Chief Executive Officer of Wazir X, an Indian Bitcoin and cryptocurrency exchange & trading site.

In an email interview, Shetty told, For individuals who were sitting at home because of the lockdown and wanted to learn new things and understand what the new opportunities are out there, crypto appeared as one of the top choices.

Last year, our trading volumes grew over 1,000 percent. User sign-ups have grown by four to five times. The number of new individuals signing up nearly doubled every two to three months, he said.

In India, Wazir X now holds over a million user accounts, up from 550,000 in June. The exchange says that 70 per cent of these users are less than 34 years old. During that time period, Zebpay and Unocoin, two other crypto exchanges operating in India, also saw a similar spike in account openings.

Worldview: Between April and November, new dematerialized account openings in India increased by 17 percent to around 48 million, which was said to be the fastest rate of new account openings in recent capital market history.

After the turmoil in global financial markets in March 2020, Bitcoin and other cryptocurrencies have had a revolutionizing run. Since April, Bitcoin has risen more than 700 percent in price terms, Ethereum by 730 percent and token Yearn Finance by 32 times.

Over the past few days, Bitcoin, the biggest cryptocurrency, whipsawed investors, hitting a record near $42,000 on January 8 and then sliding to a low of around $30,300. The price fluctuations evoked memories of the December 2017 Bitcoin bubble, which was followed by a swift crash.

Due to their extremely dynamic nature, sceptics have warned investors against going knee-deep into crypto assets and allegations of the whole thing being a ‘ponzi scheme’ remain widespread.

Shetty thinks otherwise, for one.

The profile of investors this time around who have joined the crypto movement is drastically different from those who engaged in the first Bitcoin breakout rally in 2017. It was all of people getting double their cash overnight in 2017… Today, it’s a mature collection of investors who have remained behind and have seen a full period now,’ he said.

Bitcoin is increasingly maturing into a shield against dollar weakness and inflation risk, and drawing longer-term investors, some crypto backers also claim.

Although the cryptocurrency pandemic and rally had a major role to play in the revived interest among investors, the Supreme Court’s early March quash of the RBI ban on the use of the banking system for the purchasing of crypto assets was also a key factor.

A big question mark over the legality of the crypto industry in India was lifted by the SC verdict. In addition, this helped decriminalize investors who, prior to the ban, had invested in cryptocurrencies. While investors are increasingly implementing cryptocurrencies, amid reports of money laundering and terror funding, some like Bitcoin still have an image issue with regulators.

We didn’t have anything formal yet, but we met a couple of ministers on the side and found them to be really pro-innovation, and I think that’s the most important thing,” Shetty said”. Most of them think that India should be interested in innovation, in the entire crypto ecosystem. That is an incredibly optimistic sign.

Although the status of the government remains unclear so far, Wazir X and others like it have taken steps towards self-regulation through compulsory know-your-customer protocols and the use of high-level security configurations to ensure investor cash security.

We do not want a chaotic ecosystem for the regulators to come up with. Their focus will then be on how to clean it up. But if we can self-regulate and preserve a clean environment, regulators would be able to look at how the ecosystem will grow better,’ said Shetty.

He, however, does not shy away from the challenges his industry will have to deal with. Of course, these hurdles and ups and downs and regulatory uncertainty will still occur. Regulations accompany trends, creativity comes first,’ added Shetty.

At the moment, though, Shetty believes that despite the regulatory uncertainty, India will continue to accept the crypto story. For the next five years, it will be a period of rapid innovation and participation. It has already started and is going to go on rising,” he said.

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Written by Jasspreet Kaur

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