Despite mixed developments, a lawmaker in India has confirmed that the country has no cryptocurrency ban.
While the volume and scale may not be huge by current industry standards, venture capital inflows into Indian Bitcoin companies have been hard not to notice this year. Long considered an obviously ripe market for Bitcoin adoption, the regulatory and banking establishments in India have, at times, hamstrung growth of a local commercial Bitcoin ecosystem, leading to frustration for companies building and gaining traction for their services as well as for outside capital looking to take advantage of a brimming opportunity.
But the main shackles hindering this growth came off in March, with the dramatic ruling by India's Supreme Court just a few weeks before COVID-19 shutdown was implemented, overturning prior action from the Reserve Bank of India (RBI) forbidding Indian banks from touching crypto, resulting in a slew of fresh funding rounds and attack plans.
Unocoin is the latest Indian Bitcoin company to capitalize on the momentum, announcing a new funding round with a Series A in process led by Draper Associates and with participation from Deribit backer XBTO Ventures. Upon completion, the round is expected to value Unocoin at $20 million. To learn more about its progress, as well as the changes happening for Bitcoin-focused projects throughout India, Bitcoin Magazine caught up with Unocoin Co-Founder and CEO Sathvik Vishwanath.
Vishwanath discussed the journey of his Indian Bitcoin exchange over the past seven years and explained that the drama of participating in a case before the Supreme Court was “like being in a movie.”
Tracing The Growth Of India’s Bitcoin Businesses
Between 2012 and 2016, an Indian Bitcoin exchange ecosystem developed and attracted outside capital, with a few players emerging as leaders in the market. Zebpay, Unocoin and Coinsecure each raised more than $1 million in funding and serviced a majority of the Indian market.
The RBI’s action to bar Indian banking institutions from dealing with crypto companies in 2018 — making it impossible to offer Indian Rupee (INR) onramps and trading pairs — threw a wrench into the established exchanges’ growth plans as they scrambled to figure out the best way to continue operations. It also left an opening for a new batch of startups to grab market share. Several members of this new wave used their lack of existing infrastructure to their advantage, building out a local customer base with a novel P2P structure that bypassed the banking ban. This batch included projects like BitBnS, CoinDCX and WazirX.
The Supreme Court’s new ruling, overturning its ban, has made the market a focal point again in terms of large market opportunities around the world, with outside capital and companies figuring out how to best take advantage.
This has included global exchanges putting stakes down via investment or acquisition. BitMEX parent 100x Group and Coinbase Ventures participated in CoinDCX’s Series A and strategic rounds, totaling $5.5 million. Binance acquired WazirX in a deal estimated to be worth between $5 million and $10 million. London-based Cashaa raised strategic funding totaling $5 million for India expansion.
Brand-name VCs are also leading these new rounds: Bain for CoinDCX and Draper Associates for Unocoin; Blume Ventures, with Tim Draper as a limited partner, for Unocoin’s $1.5 million round in 2016 with participation from Digital Currency Group (DCG).
In an announcement of the funding round shared with Bitcoin Magazine, DCG’s Larry Sukernik summarized what all competitors have to look forward to even as momentum builds.
“Running a cryptocurrency exchange is a tough business,” Sukernik said. “Running a cryptocurrency exchange in India is an even tougher business. The fact that Unocoin survived and thrived is a testament to the team’s ability and grit.”
Global Bitcoin product companies with teams in India are also now able to target customers in their backyards. One of these is the lending and borrowing platform Vauld (formerly Bank of Hodlers) whose CEO Darshan Bathija recently spoke with Bitcoin Magazine.
With an entity based in Singapore and customer base spanning North America, Europe and Southeast Asia, but a team concentrated in India, Darshan is “personally excited” that “India as an opportunity only really opened up since the banking ban was reversed… and it was a very positive upside for us.”
He added that “as long as there is regulatory clarity we are in an industry that is going to thrive and Bitcoin is going to be a very attractive opportunity for the 1.4 billion people in India.”
“The potential for widespread crypto adoption in India is massive,” as Unocoin Co-founder and President Sunny Ray stated in the recent DCG funding announcement.
India is the second-largest country by population in a world, with a consumer base that has long valued gold and that has rapidly moved to mobilefirst commerce and digital payments, as well as an education sector that has pushed out engineering talent at scale like no other. Combined, this makes it ripe for massive Bitcoin adoption and the rush to own the market is back on.