2024 to be a ‘golden year’ for crypto: WazirX VP

Cryptocurrency ecosystem in 2023 faced a setback in India owing to the imposition of tax in the Union Budget. Fall in global prices of various cryptocurrencies including bitcoin also didn’t help the situation. However, recovery of prices in the second half of last year saw some investors coming back to the market. Meanwhile, 2024 started on a positive note as the US Securities and Exchange Commission (SEC) approved bitcoin ETFs for trading. This move is likely to improve sentiment for this asset class. In an interaction, Rajagopal Menon, vice president at Indian cryptocurrency exchange, WazirX told the Bizz Buzz that this year is likely to be a better year in terms of overall performance for the ecosystem. He said recent notification by the Financial Intelligence Unit (FIU) of Ministry of Finance mandating foreign exchanges to pay tax as per Indian rules is expected to move more volume to Indian crypto exchanges. WazirX is confident of getting more customers at its exchanges this year on the back of introduction of new features.

In a significant development, the US SEC has approved bitcoin ETFs for investors. Will this change sentiment towards cryptocurrencies for their better acceptance across the world?

The approval of 11 Bitcoin Exchange Traded Funds (ETFs) by the US Securities and Exchange Commission (SEC) marks a significant milestone in the history of crypto. This event ushers in a new era of legitimacy and growth for bitcoin, prompting widespread interest from both retail and institutional investors. Moreover, the SEC's decision to approve 11 Bitcoin ETFs is a historic moment, introducing a new asset class to the global financial markets. It will lower barriers to entry for investors, simplifying access to bitcoin investments. The ETF approval is poised to significantly impact bitcoin's market value and overall sentiment towards cryptocurrencies.

What kind of impact will it have over Indian investors, who have shied away from investing in the crypto market in 2023?

Indians don’t have any direct access to Bitcoin ETFs as of now. However, this significant regulatory milestone is set to improve the mindset of investors globally who have been skeptical of this asset class. ETFs will also improve liquidity of bitcoin and reduce its volatility and price swings, which is another reason why investors would consider investing in crypto. There will be a huge inflow of institutional money coming into crypto which will be an impetus for Bitcoin’s price surge in the coming months, benefitting not just the Indian investors but all investors, the world over.

How is the overall crypto ecosystem in India now? Has the sentiment improved? Have investors come back to the crypto market?

Based on our trading volumes in anticipation of the ETF verdict, we have seen a rise in the number of transactions on our platform. The regulatory victory is also renewing hopes in India that it will open the doors for domestic crypto regulations and bring a wider access to virtual digital assets with lower TDS percentage. Additionally, a bull market is on the horizon.

Crypto prices have significantly improved over the last year. Has that prompted Indian investors to come back to the crypto market?

We started seeing an uptick in crypto prices sometime in the middle of last year following some events such as Ripple’s victory against SEC where it was declared that their native token was not a security. Moreover, for the first time, Bitcoin ETF application was filed, and then few other events where institutional investors made news for their foray into crypto. However, it wasn’t enough to convince retail investors to instantly come back to the market since the high TDS percentage remained a concern among many. In addition to that, the absence of an option to set off trading losses against gains while filing crypto taxes was also a deterrent. While some of these issues still remain, the market is buzzing with ETF news and we have witnessed a high uptick in trading.

What is the overall operating environment of crypto exchanges now post the tax imposition by the Indian government? Have things improved for the better?

The tax imposition by the government was much needed as an initial regulatory move for the ecosystem. However, investors found the 1 per cent TDS a little steep for transactions. We witnessed a drastic drop in trading volumes (almost 90 per cent) after the tax imposition since most investors flocked to foreign exchanges. But in a recent development, the FIU (Financial Intelligence Unit) of Ministry of Finance has notified offshore exchanges to comply with Indian regulations which makes it necessary for them to impose TDS provisions on their users in India. Following this, crypto deposits on our platform have increased as users have started transferring their funds to homegrown platforms.

In fact, there was a 250 per cent increase in deposits on our platform in just three days following 28th December (2023), when the notice first made news. In the upcoming budget session, we expect that the government will reduce the TDS percentage from 1 per cent to 0.01 per cent and also allow the setting off of losses against gains in trading.

How is WazirX doing as of now in terms of customer acquisition? How was your performance in 2023?

We had taken many customer-centric developments on our platform in 2023. Around 600,000 new users signed up on the exchange this year. We also embarked upon an ambitious expansion plan, introducing a staggering 50 new coins to the INR market and 21 to the USDT market. These offerings mirrored the diverse and dynamic nature of the crypto landscape. Similarly, to keep users abreast of the latest listings, we introduced a new feature that allows users to see the ‘most actively traded coins’ in the last two hours directly on the WazirX home tab.

What are your expectations of growth at WazirX for this year?

In 2024, we will introduce a few new features that our users have expressed interest in. It is something that we are working on at the moment and will be able to reveal soon. This will enable us to reach more crypto enthusiasts in the country who have to rely on multiple platforms to access these services. Now they will be able to avail these at WazirX. In addition to this, we will continue to partner with law enforcement agencies and educational institutions to spread awareness about virtual digital assets as this will be a crucial factor in the growth of the entire crypto ecosystem.

Do you think 2024 will be a better year than 2023 for the cryptocurrency ecosystem?

This year is already looking good with the ETF approval coming in, within the first few days of the year. We have other events to look forward to such as the bitcoin halving which is widely believed to be a catalyst for the upcoming bull run. In addition to that, the Fed could increase interest rates, thus shifting the narrative for crypto’s price surge. We will see signs of a mature market with less FUD, ‘sell the news’ cycles and greater compliance at local and global levels. All of these indicate a golden year for crypto.