Even gold-crazed Indians are investing billions in cryptocurrency

Web DeskWeb Editor

28th Jun, 2021. 02:32 pm

The slogan of cryptocurrency devotees that Bitcoin is equal to digital gold is attracting converts among the world’s largest gold holders.

According to Chainalysis, crypto investments in India increased from roughly $200 million to nearly $40 billion in the last year, with households owning more than 25,000 tonnes of gold. Despite the central bank’s explicit antipathy toward the asset class and a potential trading prohibition, this is the case.

Richi Sood, a 32-year-old entrepreneur, is one of the cryptocurrency converts. She’s invested slightly over 1 million rupees ($13,400) in Bitcoin, Dogecoin, and Ether since December, with some of it borrowed from her father. Even gold-obsessed Indians are investing billions in cryptocurrency

And she’s had good luck with her timing. She sold a portion of her Bitcoin holding when the price hit $50,000 in February then re-invested following the current drop, allowing her to support the international expansion of her education firm Study Mate India.

“I’d rather put my money in crypto than gold,” Sood said. “Crypto is more transparent than gold or property and returns are more in a short period of time.”

According to the co-founder of India’s first cryptocurrency exchange, the 18-35-year-old generation is driving growth in the country. According to the World Gold Council, Indian adults under the age of 34 have a lower desire for gold than older consumers.

“They find it far easier to invest in crypto than gold because the process is very simple,” said Sandeep Goenka, who co-founded ZebPay and spent years representing the industry in discussions with the government on regulation. “You go online, you can buy crypto, you don’t have to verify it, unlike gold.”

Regulatory ambiguity is one of the most significant impediments to wider adoption. Last year, the Supreme Court overturned a 2018 rule prohibiting banking companies from trading cryptocurrency, causing a spike in trading.

“I am flying blind,” said Sood. “I have a risk-taking appetite, so I’m willing to take a risk of a ban.”

The United States isn’t the only place where regulators are enforcing their laws. Binance Markets Ltd. has been barred from conducting any regulated business in the United Kingdom by the Financial Conduct Authority.

However, many larger individual investors are hesitant to discuss their holdings openly because of the official antipathy. With no clear income tax laws in place at the moment, one banker Bloomberg spoke to who invested more than $1 million in crypto assets expressed anxiety about the risk of retrospective tax raids if he was widely known to be a big-ticket crypto investor.

If a ban is imposed, he already has contingency measures in place to relocate his trade to an offshore Singapore bank account.

To be sure, India’s digital asset holdings are a fragment of the country’s gold market. Still, there is evidence of growth, particularly in trading: according to CoinGecko, daily trade on the four largest crypto exchanges increased to $102 million from $10.6 million a year earlier. According to Chainalysis, the country’s $40 billion markets is much smaller than China’s $161 billion.

For the time being, the rising adoption is another indicator of Indians’ readiness to accept risks in a consumer finance market plagued by regulatory failures.

“I think over time everyone is going to adopt it in every country,“ said Keneth Alvares, 22, an independent digital marketer who has invested more than $1,300 in crypto so far. “Right now the whole thing is scary with regulation but it doesn’t worry me because I’m not planning to remove anything for now.”

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