The mantra of cryptocurrency enthusiasts that Bitcoin is the equivalent of digital gold wins converts among the world’s largest holders of the precious metal.
In India, where households own more than 25,000 tons of gold, investments in cryptocurrency have grown from about $200 million to nearly $40 billion in the past year, according to Chainalysis. This is despite the open hostility towards the asset class from the central bank and the proposed trading ban.
Richie Sood, a 32-year-old entrepreneur, is one of those who switched from gold to cryptocurrencies. Since December, she has invested just over 1 million rupees ($13,400) – some of which she borrowed from her father – in Bitcoin, Dogecoin and Ether.
She was fortunate in her timing. She cashed in part when Bitcoin crashed $50,000 in February and repurchased after the latest crash, allowing her to fund the overseas expansion of her education startup Study Mate India.
“I would rather put my money in cryptocurrencies than in gold,” Sood said. “Crypto is more transparent than gold or property and the returns are more in a short period of time.”
She is part of a growing number of Indians – now totaling over 15 million – who are buying and selling digital currencies. This catches up to 23 million traders of these assets in the US and compares to just 2.3 million in the UK
The co-founder of India’s first cryptocurrency exchange says the growth in India is coming from a group of 18-35-year-olds. The latest data from the World Gold Council indicated that Indian adults under the age of 34 have a lower appetite for gold than older consumers.
“They find it much 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 over regulation. Verified, unlike gold.”
One of the biggest barriers to widespread adoption is regulatory uncertainty. Last year, the Supreme Court overturned a 2018 rule banning cryptocurrency trading by banking entities, sparking a boom in trading.
However, the authorities are showing no signs of embracing cryptocurrencies. The country’s central bank says it has “significant concerns” about the asset class, and six months ago the Indian government proposed a ban on cryptocurrency trading – though it has been silent on the matter since then.
“I’m flying blind,” Sood said. “I have the willingness to take risks, so I am willing to risk a ban.”
It’s not the only country where regulators are cracking down. The UK Financial Conduct Authority has just banned Binance Markets Ltd. from carrying out any organized work in the country.
However, the official hostility means that many individual investors are reluctant to speak openly about their properties. One banker Bloomberg spoke with, who has invested more than $1 million in crypto assets, said that with no clear tax rules on income at the moment, he was concerned about the possibility of retroactive tax raids if he was publicly known to be a major investor in the cryptocurrency. encrypted.
He already has contingency plans in place to move his trading to an offshore bank account in Singapore if a ban is imposed.
The value of Indian digital assets certainly remains a small part of its gold market. However, growth is still visible, especially in trading — the four largest crypto exchanges saw their daily trading jump to $102 million from $10.6 million a year ago, according to CoinGecko. According to Chainalysis, the country’s $40 billion market comes after China’s $161 billion.
Currently, the growing adoption is another sign of Indians’ willingness to take risks within the consumer finance sector which suffers from examples of short regulatory inadequacies.
“I think over time it will be embraced by everyone in every country,” said Kenneth Alvares, 22, an independent digital marketer who has invested over $1,300 in cryptocurrencies so far. “Right now, the whole thing is daunting from regulation, but it doesn’t worry me because I don’t plan to remove anything at the moment.”