Millennials are turning to the internet for digital assets

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Millennials are turning to the internet for digital assets

New Delhi: In hundreds of small cities and towns in India, a generation that has hardly had any experience with stocks and bonds is heading for Bitcoin, Ethereum, Cardano and Solana. The average age of 11 million users of Coinswitch Kuber, a cryptocurrency trading app that didn't exist 18 months ago, is 25, and 55% are from outside large metropolises like New Delhi or Mumbai.

Broad acceptance of digital tokens by millennials and Generation Z is helping the industry step out of the shadows, a far cry from 2018 when the CEOs of a crypto exchange were briefly in police custody for daring to put up a kiosk in a Bangalore shopping mall where people could swap Bitcoin for money. The trade is now very visible and highly public. CoinSwitch, which started out as an aggregator of the best real-time pricing for digital assets around the world, already has something. In 2018, the fledgling venture couldn't play on its home turf because India’s monetary authority instructed banks to not entertain customers that dealt with virtual currencies. Only in March 2013 the Supreme Court overturned the ban. CoinSwitch acquired 11 million customers in 16 months. Investors discovered the startup: It recently became the first to raise money from Silicon Valley venture capitalist Andreessen Horowitz, at a valuation of $1.9 billion.

In such a short time, the industry itself demands to be regulated. We've decided that we will show our faces, says Ashish Singhal, one of the CoinSwitch founders. Even if regulation breaks our business in the short run, it is better than being forced to work in a gray area with little certainty and not much room for growth. Since the Supreme Courts ruling last year, fears of being outlawed have swirled since the ruling gave dying industries new life. But that risk is receding now. Although Beijing announced last month in most unequivocal terms its resolve to root out all transactions in virtual currencies, the consensus opinion is that New Delhi will hesitate to take such a step. That's partly because the relationship between private business and the state is different in India where politicians need corporate donations to fight expensive elections, and citizens don't like being told whether tutoring, online gaming — or owning crypto assets — is bad for them.

But in part the industry's confidence stems from the belief that policy makers have been persuaded of benefits to the economy from blockchain-based innovation. iSPIRT, an influential Bangalore-based think tank, is advising India to embrace the growing field of decentralized finance to close a $250 billion funding gap for small and midsize firms, and build a Wall Street for all on the Internet, as Balaji Srinivasan describes it in his previous position as the Chief Technology Officer of Coinbase Global Inc. the largest U.S.-based crypto exchange Coinbase Global Inc.

What were some states which missed the Internet 1.0, says Singhal? We gave world-class talent to Google and Microsoft, including their current CEOs, but we didn't create those titans. With blockchain, we can create some global giants. Still, the widespread adoption of crypto trading continues to make authorities — especially the central bank — uncomfortable. Coinswitch isn't the only firm employing celebrity endorsement to drum up business ahead of Diwali, the traditional gold-buying season. According to Bloomberg News, officials recently met with Amitabh Bachchan to inform Bollywood superstar of their concerns over his brand deal with CoinDCX, another Indian crypto exchange.

The speculative current fervor could use some tamping, though it's too late to try something more draconian. What does putting an entire asset class off limits be good for Generation Z investors? They have grown up on the internet, says Sharan Nair, CoinSwitch chief business officer. Many are us who want to solve crypto world problems by contributing code. What can I do as shareholder in a bank that they don't like? About 83% of urban Indians own digital currencies, while 16% are aware of them, according to a survey by data analytics firm Kantar. Many more want to — the draw of crypto is now half as powerful as that of mutual funds, a product with which older generations have a far deeper familiarity. That is a glimpse of what investors portfolios will look like in future: a mix of digital assets and traditional financial products. If, without the reflected light of Bollywood stars, India's crypto industry wont go dark again.

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