Trading doubles

Young Indians discover cryptocurrencies for themselves

"You're just one trade away from your dream life."

(Bild: nanskyblack (KI-generiert))

More and more young people in India are turning to cryptocurrencies to supplement their meagre incomes. The trading volume has recently doubled. But while advertising promises great wealth, questions remain about regulation. 

"You are just one trade away from your dream life," reads a promising poster in the classroom of the "Thoughts Magic Trading Academy" in the Indian industrial city of Nagpur. Like thousands of his compatriots in faraway places, flower shop owner Ashish Nagose has been attending courses over the past two months to learn how to trade cryptocurrencies.

"I want to continue my family business and hope that trading will provide a regular income when business slows down, like in the month after Diwali," Nagose said as he waits for buyers for his bouquets of red roses and orange marigolds in his store.

Crypto enthusiasts like Nagose have contributed to the rapid growth in trading volumes of Bitcoin, Ethereum, Dogecoin and other cryptocurrencies on India's four largest exchanges. According to data from the CoinGecko platform, the volume more than doubled to 1.9 billion dollars from October to December compared to the previous quarter.

Nagose used to bet on stock options, but as regulators have made it more difficult to trade equity derivatives in India, he is now venturing into the new asset class. Like the 28-year-old, more and more young Indians are dabbling in crypto trading to supplement their income as salary hikes fail to keep pace with rapid economic growth in the world's most populous country of more than 1.4 billion people.

Trump boost
"There is a lot of curiosity at the grassroots level ... especially because Trump has become US president and the whole cryptocurrency world has changed globally," explained Edul Patel, co-founder of Mudrex, an Indian crypto exchange. Overall, the Indian crypto market is expected to grow from 2.5 billion dollars in 2024 to over 15 billion dollars in 2035, which corresponds to an average annual growth rate of 18.5 percent, predicted Kush Wadhwa, partner at the consulting firm Grant Thornton Bharat.

Despite the crypto boom fueled by US President Donald Trump and the skyrocketing prices, private investors outside the mega cities are the main driving force in India. "The growth is currently being driven by cities outside the metropolitan areas," said Balaji Srihari from CoinSwitch, one of India's largest crypto platforms. "This is true for the equity world and for cryptocurrencies."

Out of ten centers that would have driven crypto activity in India in 2024, seven cities are in the lower category with a population in the low single-digit millions, such as Jaipur, Lucknow and Pune.

Regulation as an open flank
However, the growing interest could pose a challenge for the Indian authorities. They are warning of the risks and strong fluctuations in cryptocurrencies and are trying to restrict trading through high taxes. The 30 percent tax on profits from crypto trading is one of the highest in the world. However, unlike most G20 countries, India has neither introduced new standards for regulating cryptocurrencies nor subjected digital currencies to the existing securities regulations.

It is therefore unclear who has regulatory oversight over cryptocurrencies in India. Indian market regulators had already signaled last year that they were ready to supervise crypto trading, but the government had yet to make a statement on the matter. Meanwhile, the central bank warned in its financial stability report at the end of the year: "The widespread use of crypto-assets and stablecoins has implications for macroeconomic and financial stability." Neither the Indian Ministry of Finance, nor the central bank, nor the market regulators commented on this when asked by the Reuters news agency.

However, like Nagose the florist, this does not stop 25-year-old Sagar Neware from diving into crypto trading at night. "My father had to close his plastic packaging business a few years ago," said the mechanical engineer from Nagpur, who earns 25,000 rupees, the equivalent of just under 275 euros, a month from the local transport authority. "My biggest dream is to rebuild it with the money I earn from the trade."