The national lockdown, along with working from home, seems to have brought in a flurry of new participants and increased trading volumes in cryptocurrency, which was already seeing renewed interest after the Supreme Court lifted the ban on trading.
While there have been a number of new players entering the sector, experts and companies also say that there are a lot more retail investors participating in the last three to four months.
“Along with the lifting of the restrictions on trading, the lockdown has also pushed people to stay at home and many people are spending more time on their desktops and many of them are trading more. Trading volumes are quite robust. Daily crypto trading volume in India may be $10-$30 million,” said Ajeet Khurana, former head of the Blockchain and Cryptocurrency Committee of the IAMAI and former CEO of Zebpay, adding that the numbers have become significant enough for this to become a valid asset class and commercial activity. “The regulators can no longer look away and fundamental issues like classification, taxation, need to be addressed,” he stressed.
According to Nischal Shetty, Founder and CEO, WazirX, more entrepreneurs are looking to enter the cryptocurrency sector in the last three to four months.
“At WazirX, we have seen three to four times increase in sign-ups. These are new entrants. Trading volumes have increased 400 per cent in the last few months,” he said, adding that it has been a combination of the lifting of the ban as well as the lockdown.
“The lockdown has been a major factor. People have more time to understand and learn new things. Also, a lot of people are looking for new avenues of making money online, as they don’t have a job right now or their jobs are offline and they can’t go to work. Crypto markets have stayed very strong,” he said.
Need for regulatory clarity
However, the lack of clarity on regulations and reports of a possible law to ban cryptocurrency continue to be a dampener, players said.
Last year, the Subhash Garg-led inter-ministerial panel had recommended banning cryptocurrencies in India, citing risks and volatility in prices.
In March, the Supreme Court had allowed banks to provide services for virtual currencies. But the government has been unable to take a call on how to regulate this segment despite several committees coming up with proposals, including two draft Bills.
“Everything happening today is in a policy vacuum where people are doing business but don’t know what the future holds for them,” said Navin Gupta, Managing Director for South Asia and MENA, Ripple. His colleague, Sagar Sarbhai, Head of Regulatory Relations for APAC and Middle East, said that while trading volumes have gone up, lack of clarity on regulations is hindering progress of the industry.
“Without clarity on regulations and a framework in place, companies like us will not launch enterprise use cases for digital assets,” he said.
“Before the ban, India was among the top three or top four countries globally but now it is nowhere near that. With more clarity, a lot of players and exchanges will come and launch in India,” he said.
Shetty said the Internet and Mobile Association of India (IAMAI) is working on a code of conduct for cryptocurrencies.
“We, as part of IAMAI, are trying to come out with regulatory pointers. Guidelines such as those on KYC will address concerns on money laundering and illegal activity,” he said, adding that WazirX already follows this.