By Suvashree Ghosh and Ronojoy Mazumdar
The cryptocurrency lover’s mantra that Bitcoin equals digital gold is winning among the world’s largest owners of the precious metal converts.
In India, where households own more than 25,000 tons of gold, investments in crypto rose from about $ 200 million to nearly $ 40 billion last year, according to Chainalysis. This is in spite of open hostility towards the asset class on the part of the central bank and a proposed trade ban.
Richi Sood, a 32-year-old entrepreneur, is one of those who switched from gold to crypto. Since December, she has invested just over 1 million rupees ($ 13,400) – some borrowed from her father – in Bitcoin, Dogecoin, and Ether.
And she was lucky with her timing. She paid off part of her position when Bitcoin broke $ 50,000 in February and bought back in after the recent slump, which allowed her to fund the overseas expansion of her education startup Study Mate India.
“I’d rather invest my money in crypto than gold,” said Sood. “Crypto is more transparent than gold or real estate and the returns are higher in a short time.”
She is part of a growing number of Indians – now more than 15 million – who buy and sell digital coins. That catches up with the 23 million traders of these assets in the US, comparing them to just 2.3 million in the UK
The growth in India is coming from the 18-35 year old cohort, says the co-founder of India’s first cryptocurrency exchange. Latest data from the World Gold Council shows that Indian adults under 34 years of age have less 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 has represented the industry in discussions with the government about regulation for years. “You go online, you can buy crypto, you don’t have to verify it, unlike gold.”
One of the major barriers preventing wider adoption is regulatory uncertainty. Last year, the Supreme Court overturned a 2018 rule that banned crypto trading by banking institutions, resulting in a surge in trading.
However, the authorities are showing no signs of accepting cryptocurrencies. The country’s central bank says it has “major concerns” about the asset class and six months ago the Indian government proposed a ban on digital coin trading – although it has been silent on the issue since then.
“I’m flying blind,” said Sood. “I take risks, so I am ready to accept a ban.”
However, the official hostility means that many larger individual investors are reluctant to speak openly about their holdings. A banker Bloomberg spoke to, who has invested more than $ 1 million in crypto assets, said he currently lacks clear income tax rules and is concerned about the possibility of retroactive tax raids if he is publicly known as a major crypto investor be.
He already has contingency plans to move his trading to an offshore Singapore bank account in the event a ban is put in place.
Of course, the value of India’s digital asset holdings remains a sliver of its gold market. Still, the growth is significant, especially in trading – the four largest crypto exchanges saw daily trading spike to $ 102 million from $ 10.6 million a year ago, according to CoinGecko. The country’s $ 40 billion market is well behind China’s $ 161 billion, according to Chainalysis.
For now, increased adoption is yet another sign of Indian willingness to take risks in a consumer finance sector plagued by examples of regulatory deficits.
“I think over time everyone in every country will adopt it,” said Keneth Alvares, 22, an independent digital marketer who has invested more than $ 1,300 in crypto to date. “Right now, the whole regulation thing is scary, but I’m not worried because I have no plans to remove anything for now.”
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