BENGALURU: Cryptocurrency startups in India have been gaining ground with the Supreme Court lifting the Reserve Bank of India (RBI)’s controversial ban on cryptocurrency trade in the country.
Additionally, some startups have also been benefitting from the market volatility in the wake of covid-19 outbreak.
“RBI lifting the ban of cryptocurrency trading in India has fuelled new energy in the market. The volatility in the market due to covid-19 is also encouraging more people to trade in the exchanges,” said Ashish Singhal, chief executive officer, CoinSwitch.
Sequoia Capital-backed CoinSwitch is a virtual currency exchange aggregator, present in more than 160 countries with about 400,000 active users per month. “About 10% of our user base is in India as of today but with the new regulations and current environment, the number is expected to substantially increase,” Singhal said.
On 4 March, the Supreme Court quashed a ban imposed by the RBI on trading in virtual currencies such as bitcoin. As part of the ban, the central bank had issued a circular on 6 April, 2018, that barred RBI-regulated entities from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies.”
India’s largest cryptocurrency exchange, by volumes, WazirX has seen its daily volume grow by over 470% in the last 30 days. Recently acquired by Binance, WazirX has over 300,000 registered users and has clocked total volumes worth $286.3 million till date.
“With a population of more than 1 billion, the Indian market is a sleeping giant. The news on RBI lifting the ban will further boost crypto adoption in India,” said Nischal Shetty, founder and CEO, WazirX.
Even during the ban, people continued to trade with the help of peer-to-peer (P2P) networks but the RBI’s approval is expected to act as a catalyst to the growth momentum.
“Crypto exchanges including WazirX have now enabled banking channel for INR deposit and withdrawals. With banking channels now open, it has made easier for Indians to enter crypto. Due to the banking ban, Indians had to use P2P which was successful for WazirX but banking channel will be even more successful as it’s more convenient for users,” said Shetty.
Due to covid-19, cryptocurrencies have seen a sharp movement in prices which has naturally triggered more trades as market volatility is key to determining trading strategy and investment decision. “But even though crypto is showing signs of stability in this financial turmoil right now, we will need to wait and watch for the next few weeks to understand how crypto markets really handle their first ever exposure to global financial crisis,” Shetty said.
Looking ahead, “we believe the covid-19 crisis will reinforce the tremendous value of crypto and blockchain technology,” said Garrick Hileman, head of research, Blockchain.com. “Stablecoins (a type of cryptocurrency designed to maintain a stable market price) have seen their combined market value almost double in Q1… If crisis dynamics continue to worsen in emerging markets, we may see a dramatic further increase in the use of stablecoins.”