After their love affair with gold, Indians turn to crypto

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The mantra of cryptocurrency aficionados that Bitcoin is the equivalent of digital gold is winning converts among the world’s largest holders of precious metal.

In India, where households own more than 25,000 tonnes of gold, crypto investments jumped from around $ 200 million to nearly $ 40 billion last year, according to Chainalysis. This is despite outright hostility to the central bank’s asset class and a proposed trade ban.

Richi Sood, a 32-year-old entrepreneur is among those who have made the switch from gold to crypto. Since December, she has invested just over one million rupees ($ 13,400) – part of which borrowed from her father – in Bitcoin, Dogecoin and Ether.

And she was lucky with her timing. She cashed in part of her position when Bitcoin smashed $ 50,000 in February and bought back after the recent crash, allowing her to fund the overseas expansion of her education startup Study Mate India.

“I would rather put my money in crypto rather than gold,” Sood said. “Crypto is more transparent than gold or property and returns are faster.”

She is one of a growing number of Indians – now totaling over 15 million – who buy and sell digital coins. This catches up to the 23 million traders of these assets in the US and compares to just 2.3 million in the UK.

Growth in India is coming from the 18-35 cohort, says the co-founder of India’s first cryptocurrency exchange. The latest data from the World Gold Council indicates that Indian adults under 34 have less appetite for gold than older consumers.

“They find it much easier to invest in crypto than in 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 regulations. “You go online, you can buy crypto, you don’t have to verify it, but gold does.”

One of the main obstacles preventing wider adoption is regulatory uncertainty. Last year, the Supreme Court overturned a 2018 rule banning crypto trading by banking entities, which resulted in increased trading.

However, authorities show no signs of adopting cryptocurrencies. The country’s central bank said it had “major concerns” about the asset class and six months ago the Indian government proposed a ban on trading in digital coins – although it has been silent on the subject ever since. .

“I fly blind,” Sood said. “I have an appetite for risk taking, so I am willing to take the risk of a ban.”

READ ALSO: Global Cryptocurrency Exchanges Light Up Entry To India Despite Potential Ban

Official hostility, however, means that many large 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 that in the absence of clear tax rules at the moment, he was concerned about the possibility of raids. retrospective tax whether he was publicly known to be a large crypto investor.

It already has contingency plans in place to move its transactions to an offshore bank account in Singapore if a ban were to be introduced.

Certainly, the value of Indian digital holdings remains a fragment of its gold market. Still, the growth is clear, especially in trading – the four largest crypto exchanges saw daily exchanges jump to $ 102 million from $ 10.6 million a year ago, according to CoinGecko. The country’s $ 40 billion market is well below China’s $ 161 billion, according to Chainalysis.

So far, growing adoption is another sign of Indians’ willingness to take risks in a consumer finance industry that is plagued by examples of regulatory loopholes.

“I think over time everyone is going to adopt it in all countries,” said Keneth Alvares, 22, a freelance digital marketer who has invested over $ 1,300 in crypto up to. present. “Right now it’s all scary with the regulations, but that doesn’t worry me as I don’t plan to remove anything just yet.”

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