The average daily crypto currency trading volumes across the top Indian exchanges has grown by nearly 500% since March 2020, when the Supreme Court struck down the Reserve Bank of India’s (RBI) April 2018 circular. While the apex court’s order had removed the restrictions on banks from working with crypto firms, the COVID-19 pandemic has also encouraged investors to start investing in crypto currencies.
According to data from CoinGecko, the average daily traded volume across the top four Indian crypto currency exchanges stood at over $22.4 million as of December 16, 2020 compared to a little under $4.5 million as of March 1, 2020. The exchanges include WazirX, ZebPay, CoinDCX and BitBNS. Data for other exchanges was not available on CoinGecko.
According to research by global crypto currency exchange, Paxful, India is the second biggest Bitcoin nation in Asia, after China, and the sixth biggest in the world, after the United States, Nigeria, China, Canada and the United Kingdom. Between January 1 and November 14, 2020, close to $74.92 million Bitcoins were traded on Paxful by Indian investors, which is 347% higher than the previous year, it said.
Factors driving crypto adoption in India
As a result of the Supreme Court order, the majority of Indian crypto currency exchanges shifted their business model from a Peer-2-Peer model to a direct model, whereby Indian crypto investors could buy crypto currencies directly through their debit or credit cards and bank accounts. The fact that banks are now open to doing business with domestic exchanges has brought a sense of trust for Indian investors.
Further, since neither the RBI nor the government has introduced new guidelines or restrictions on crypto investing, Indian banks have begun providing various services to domestic exchanges such as payment gateways, working capital loans and other facilities. Some of the leading banks including HDFC Bank, Yes Bank, State Bank of India, ICICI Bank along with smaller government-owned and private banks are now doing business with Indian crypto exchanges.
A recent survey by CoinDCX revealed that around 54% of crypto currency investors in India earn less than ₹10 lakh per annum and around 78% of them already invest in mutual funds and stocks. “After the Supreme Court order, we were able to switch to the banking model where people could transfer money to our account which is more secure and efficient that the Peer-2-Peer model. The trading volumes and user registrations have grown significantly in the last few months on the back of the Supreme Court order and the rise in Bitcoin prices. The good sign is that regulators are allowing the industry to grow organically, while the exchanges are ensuring that Know-Your-Customer norms are followed strictly,” said Sumit Gupta, co-founder and CEO, CoinDCX.
“If we had 100 users signing up on a daily basis prior to March, we are now seeing 800 users signing up on a daily basis. We are now processing around ₹70-80 crore worth of trades on a daily basis,” Gaurav Dahake, chief executive officer, BitBNS told MediaNama. Dahake said that the primary drivers for the rise in trading volumes stem from the Supreme Court order and the COVID-19 pandemic due to which people who lost their jobs or those who witnessed a salary cut turned to crypto currencies as an alternative option to make money.