They were also minting money in Bitcoins. A lot more money!
“When the pandemic lockdown started, we saw an even higher number of people coming in,” said Nischal Shetty, Founder and Chief Executive Officer of Wazir X, an Indian Bitcoin and cryptocurrency exchange & trading platform.
For people who were sitting at home because of the lockdown and wanted to learn new stuff and understand what are the new opportunities out there, crypto emerged as of one of top options, Shetty told ETMarkets.com in an email interview.
“Our trading volumes grew over 1,000 per cent last year. User sign-ups grew four to five times. The number of new people signing up almost doubled every two-to-three months,” he claimed.
Wazir X currently boasts over a million user accounts in India, up from 550,000 in June. The exchange says 70 per cent of these users are aged less than 34. Zebpay and Unocoin, two other crypto exchanges operating in India, also saw a similar spurt in account openings during that period.
For perspective, new dematerialised account openings in India grew 17 per cent between April and November to around 48 million, which was said to be the fastest pace of new account openings in recent history of the capital market.
Bitcoin and other cryptocurrencies have had a trailblazing run since the mayhem in global financial markets in March, 2020. Bitcoin has grown more than 700 per cent in price terms since April, Ethereum by 730 per cent and Yearn Finance token by 32 times.
“We do not want the regulators to come up with a messy ecosystem. Then their focus would be on how to clean it up. But if we can self-regulate and keep a clean ecosystem, the regulators can look at how to grow the ecosystem better,” Shetty said.
Bitcoin, the largest cryptocurrency, whipsawed investors over the past few days, hitting a record near $42,000 on January 8 and then tumbling to a low around $30,300. The price swings evoked memories of Bitcoin’s December 2017 bubble that was followed by a rapid collapse.
Sceptics have warned investors against going in knee-deep into crypto assets given their extremely volatile nature and allegations of the whole thing being a ‘ponzi scheme’ remain ubiquitous.
Shetty, for one, thinks otherwise.
The profile of investors, who have joined the crypto phenomenon this time around, is radically different from those who participated in the first breakout rally in Bitcoin in 2017. “In 2017, it was more about people getting into double their money overnight… Today, it is a mature set of investors who have stayed back and they have now seen a complete cycle,” he said.
Some crypto backers also argue that Bitcoin is fast maturing into a hedge against dollar weakness and inflation risk, and attracting longer term investors.
While the pandemic and the rally in cryptocurrencies had a major role to play in the renewed interest among investors, one key reason was also the quashing of the RBI ban on the use of the banking system for purchase of crypto assets by the Supreme Court early March.
The SC verdict lifted a major question mark over the legality of the crypto industry in India. This, in effect, helped decriminalise investors who had invested in cryptocurrencies prior to the ban. While investors are rapidly embracing cryptocurrencies, some like Bitcoin still have an image problem with regulators given allegations of money laundering and terror financing.
“We have not had anything formal yet, but on the side we have met a few ministers and found them to be very pro-innovation and that is I think the top most thing,” Shetty said. “…most of them believe India should participate in innovation, in the whole crypto ecosystem. That is a very positive sign.”
While government’s stance so far remains unclear, Wazir X and others like it have taken steps towards self-regulation through mandatory know-your-customer protocols and use of high-level security setups to ensure safety of investors’ money.
“We do not want the regulators to come up with a messy ecosystem. Then their focus would be on how to clean it up. But if we can self-regulate and keep a clean ecosystem, the regulators can look at how to grow the ecosystem better,” Shetty said.
He, however, does not shy away from the hurdles that his industry will have to contend with. “Of course, there will always be these barriers and ups and downs and regulatory uncertainty. Regulations follow innovations, innovation comes first,” Shetty added.
At the moment, though, Shetty believes India will continue to embrace the crypto story in spite of the regulatory uncertainty. “It is going to be a time of rapid innovation and participation over the next five years. It has already started and is going to go on rising,” he said.