TRON 4.0 Online Conference: Nischal Shetty — Founder of WazirX: India Crypto Regulation
Thank you for having me on the show. I’m the founder of WAZIRX. Before WAZIRX , I used to build software for social media management called “Crowdfire” scaled it up from zero to 7 million users, raised some money and then scaled it to more users and eventually ended up building WAZIRX which was acquired by Binance about 6 months ago. I am sure you are familiar with the insecurity of crypto in India.
I thought I would walk you through the journey that India has been facing in terms of crypto. I will give you some thoughts on it and the future of crypto in India.
My objective with this is to help anyone out there who is facing something similar like in their country because crypto is such a new technology. What is happening is that we are seeing a lot of regulation globally. Not just in India but I see it as a constant problem and I talk to entrepreneurs globally. The biggest problem that anyone in the crypto space is facing today is the regulatory uncertainty. I thought, why not talking about how we have been tackling it in India and maybe you can draw some inspirations and apply it to your country. You may or may not be building it but if you are part of the crypto ecosystem, I believe that helping your country adapt to crypto and understand about crypto is a service in itself.
If any of your countries should participate in crypto, I think you can learn a lot from this. What I’m going to present. Let’s start with the past. The biggest problem in India in terms of regulations started in April of 2018. It was the time when the central bank in India announced a circular saying they were going to bring about a banking ban in the country. This is shocking for the entire crypto ecosystem in India. If you were following it back then in 2018, you would have realized that a lot of publications and news media around the world spread the news that crypto has been banned in India.
So it was a mix of problems in the country but we also saw a lot of misinformation. Because what we knew in 2018, what happened in India was a banking ban. It was not a crypto bank. It meant that as an exchange in India, we would not get access to bank accounts but the story that went out globally and even in our country was that the whole crypto ecosystem was banned. That it was illegal to own crypto and trade crypto.
The reality is there was no ban on crypto in India ever. There’s never been a ban on crypto in India. The only ban that came was a banking ban which meant we wouldn’t get access to banking. So we had to spend a lot of time explaining this very thing that it’s not a ban. It’s just a restriction on banking. How do we approach this? How do we go forward? How did we navigate this is what comes next. So the first and foremost thing that we did is, all of us including WAZIRX and all of the other exchanges in India. We all got together and we decided we would fight this in the Supreme Court of India which is the highest court in the country.
So we filed a case against the banking bank. While the case was going on, we knew we could not just sit on the sidelines without banking access and let the country not participate in crypto. So how did we navigate the banking ban in the country?
So if you think about it, when you’re running a business and you have banking, it virtually means you cannot function as a start-up because the banking ban meant you could not easily pay money to your employees. You could not accept deposits or process withdrawals for your clients. You could not do anything without a bank. Imagine running a company without a bank?
So here’s what we did. We decided that while we cannot get a bank account, our users on our exchange could easily get a bank account because they already had bank accounts.
So why not bring in a peer to peer way for people to still get involved in crypto. That was the first thing we did. We launched a peer to peer trading platform for people and this helped everyone in India still get involved with crypto because, without banking, the peer to peer mentor became the best way for people to get involved.
So if you’re in a country where let’s say, you have banking access or you are getting your bank accounts, I would strongly recommend looking into the peer to peer way. It’s a very popular way of transacting today but back then, in 2018, it was one of the newer things to do.
So peer to peer really helped us navigate the banking ban in India. While we built a solution, we also knew that we had to do something about the solution to the temporary ban that was happening and that was, to create awareness in the country.
So one of the most popular things that I did in India was to launch a campaign on Twitter called hash India wants crypto. The object of this campaign was to ensure the — because what I told you just is that a lot of misinformation was spread in the country.
While we had a solution to navigate the bank, people in the country thought that due to the crypto ban, it’s hard to get involved. It was hard for us to tell people, they can still buy crypto and be involved in crypto.
So we launched a campaign called India wants crypto and the objective is how we can get it.
I spread out new information about crypto every day starting with day one. I thought I would continue for a few days but the campaign is still ongoing. I still tweet today. It’s been over 6 hundred days of the campaign running. The beautiful thing about this campaign is, as I started tweeting, at day 1 or 2 ten or twenty people began liking it. Eventually, a lot of the people in our country in India started supporting the campaign. What that led to is the spreading of the right information about what is the situation of crypto in India. Whether it’s banned or not. Whether you can transact in it or not.
All of this information started to spread in the country. Before this, there were a lot of people in India who thought that crypto was something that you couldn’t do and there were only scams in this sector. That was the mindset. It was important for us to launch a campaign like this so that we could change the mindset of people.
If you look at any new technology, there’s always fear in the beginning. Like the internet. When I first used the internet way back in my school days, I ordered something online and it never reached me. I decided that the internet was a scam but over a period of time today, I buy everything online and I’m sure you do the same. So you can see how technology is seen. It’s the very same situation with crypto trading. A lot of people think about crypto as a scam and that was the situation in India too.
Through the campaigns, we ensured that we could spread the right information and tell everyone in our country that you have a lot of good things that you can build on crypto. So this is, I think, something that all of us should do. Spread the innovation, spread the right things that are happening in the ecosystem. When you do that, people get comfortable and they ease into the crypto idea. So that has been happening very beautifully in India and this campaign has been helping a lot.
While this is happening, we also, as the start of this, we started to face a lot of trouble, in terms of let’s say, capital access. So when you have a banking ban in your country, you will realize that none of the investors, none of the people want to invest in a crypto startup. Being a crypto start-up, we wanted to grow faster and grow the ecosystem. What we decided is that we would find traditional investors would not invest but there are innovative companies out there that may want to invest.
We found a partner in Binance. We started speaking. We started with a fundraiser and eventually, we realized our motivations and our direction and our mission was the same which is to spread the knowledge of crypto and spread access of crypto to everyone.
So instead of fundraising, it began an acquisition where Binance ended up acquiring WAZIRX. That was the major event in India. But I think that gave a lot of, I would say, encouragement and courage to the other entrepreneurs in the country to build more into crypto.
So these were the things that shaped the last one to two years of crypto in India, 2018, and 2019. Now, these two years, let’s come back to the present. What happened? Just a few months back in March, we won the case that we had launched in the Supreme Court in 2018. So the case that I spoke about in the previous slide happened in 2018. We finally won that in March 2020 this year. It was a great relief for the entire ecosystem. Everyone, you know, was happy with the fact that they could now start using the bank accounts to access crypto.
We started seeing rapid growth in our country because of that. A lot of good things happened. For example, one of the things that we saw, as of the banking, the ban was lifted, our numbers increased in terms of sign up and volume. We started growing that number. A lot of new startups have started now coming up in the country.
Some of the things you can see are on the slide. We have seen our monthly volumes grow by 66 percent all thanks to the banking ban being lifted in the country.
So this is the graph where you can see the banking ban was lifted towards the end of March and in April, you can see the shoot up in the volume that had happened. So this is the current state in India that is about five million people in crypto. It’s a large number but it is still very small in terms of the size of the population here. The question is what happens when this whole ecosystem is generalized in the country?
When you go to five million and in the next couple of years, India will see at least 20 to 50 million users in the ecosystems. This will help us get a lot of adoption in the country and even globally. Some of the things that we are doing right now are still spreading the knowledge of crypto and the idea is also to help new startups start in the country.
Creating new startups with the ideas in crypto space to come up with new solutions for the country. That’s a lot of going on today in India. If you happen to be from India, I would encourage you to have something for the Indian audience. There’s a lot of people looking at it and we need good solutions to onboard them. If you are not from India, I would suggest that you still look at India as an option to build because of whatever onset, India has a large population. So if you can build the right solution, you can sign up millions of people in this country which will lead to a faster adoption for crypto.
I’m here to help out anyone who needs it. I am on Twitter, as well. So if you need any help with building for an Indian audience, I hope you got some idea, crypto is not banned in India. There’s a demand for that. I am here to help you out. This is just a short presentation to make you aware of crypto in the country and to also tell you, with a few focused efforts which are to build a good product, spread the right information about crypto in your country, you will see a good option of crypto wherever you are. Thank you!