Since when have you been interested in cryptocurrencies and why?
I was always keen on learning technologies and using them across various verticals. I worked as a techie in one of the prominent IT MNC. When I completed my masters in Management, I decided to tackle some of the financial disparity with the help of technology. Blockchain was new and exciting and I could see problems that came with traditional investment methods and institutions. It was in 2013 in one of the meetups when I met Sunny, who was also a blockchain and crypto enthusiast that we finally decided to build what we all know as Unocoin today.
What made you enter the cryptocurrency space in India? What propelled you to set up an exchange? Where did you get your funding for setting up the exchange? Tell us about your promoters and financiers.
By 2013 blockchain technology was emerging. I was a techie, a management graduate and an Indian who realised that there are a lot of problems that Indians face, which revolve around the usage of traditional currency and transactions. The hidden transaction fees, foreign exchange rates, extra and filthy taxes, etc were on a higher side and this needed a solution that was backed by unbiased technology. Setting up an exchange was not an expensive task given I had a bunch of software developers from my previous business. I just had to pull a couple of them out of that team and start working on building Unocoin. Ours is a four-member co-founding team and all four of us are coming from varying experience and background which in total could form pretty much an invincible team to build a startup like Unocoin.
What issues have you been facing while running a cryptocurrency exchange in India?
Reaching out to customers, educating them around crypto, myth busting, security threats, coming up with better inhouse investment plans for our customers, and of course, legal hurdles have been some of the issues we have dealt with in the past. To come out stronger, we have groomed our customer support team, created the Systematic Buying Plan as a periodic crypto investment, pleaded with the supreme court to make crypto favourable moves, have conducted and participated in audits to have inviolable security features and are currently creating content to educate our users.
What is the government’s and authorities’ (RBI) stand on income from cryptocurrency and how is it affecting the eco-system?
Simply put, the people who trade in cryptocurrency consider the profits as an income from other sources and this is the segment most of the present-day crypto investors fall into. The short term investors treat it as a short term capital gain while the investors who hold it for at least two years are treating their income as a long term goal. While this is not really recommended by any regulator or authority, this has become a DeFacto norm in India.
Have you been making any representations to the government so that they come up with a set of rules for cryptocurrencies? If yes, tell us about them.
Of course yes. We talk to those ministers who are stakeholders and responsible for setting up a committee for studying the crypto industry in India and abroad. This would help the committee to come up with a comprehensive framework for regulating crypto in India which are in line with the present law of the land. On the other side, we also are educating these ministers, so that we influence them to favour the crypto space if and when a negatively biased bill comes up on the Parliament table for voting and acceptance.
In the absence of any authorities that oversee the market for cryptocurrencies, unlike the stock market, what are the possibilities of huge losses for investors since there are no safety nets like upper circuits or lower circuits?
As the crypto industry is not globally regulated by a single entity or country, it falls into the realm of individual country’s present laws and regulations. This also means the crypto market is active 24x7 and on all 365 days of the year which is very different from equity markets which only work for 8 hours on weekdays. On the other side, since the market cap of the crypto industry is less, it can undergo influences from a specific country, business tycoons, entities and institutions like Microstrategy or Square or PayPal, and also, from influential individuals like Elon musk. As the market cap continues to grow, the external influence from these factors continues to diminish. However, for the time being, we have even seen market fluctuation and manipulation without any visible reason behind it.
How to read the cryptocurrency market to make the most of it?
Before anyone wants to enter the world of crypto, they should know why they want to choose crypto in the first place. They need to understand how the normal traditional transactions work as compared to a crypto transaction and hence understand the value of fast and free transactions on the internet. On the other side, they should also be aware of the volatility of crypto assets and that they might lose all their money as there is no obligation for anyone to buy their crypto in the future. They must read about the regulations around crypto in their country and must know that it may not be favourable in their country in the future, the investments could get struck as well. The regulations are the laws set by the government which act as supreme. As crypto is a valuable yet experimental asset, there is also a chance that there is no value for crypto someday. Eventually, the people who believe its value to be far greater than the risk involved are taking the bets.
Do you feel cryptocurrency can be a regular investment for building a portfolio for the long term?
True, but the investor should be vigilant about the extra risk involved as compared to equity and the commodity markets. It is always advised to maintain a healthy balance between crypto and the rest of the portfolio. The asset managers in developed countries seem to recommend an investment of 2-5 per cent of the portfolio of a high net worth individual as the crypto investment. In the past, there are also stories about how such an investment ratio of 5:95 over a period of five years has fetched enough returns to convert the portfolio into a 95:5 ratio!
Should retired individuals invest in cryptocurrencies? If yes, what prudent behaviour should they follow?
Interestingly, the pension funds in the developed countries already have taken significant exposure to bitcoin on their balance sheet. Cryptocurrencies are not a short term investment instrument, but a long term plan. Retired individuals must be careful about their investment and read about the risks.
What are your messages for investors as an exchange?
Unocoin is one of the safest and most reliable crypto exchange platforms. We are made by Indians, made for Indians and made in India platform, who understand the problems of the citizen of our country and would like to contribute to our nation. This is a high time when we would like our people to have financial freedom and make the decision for their money. Unocoin offers multiple useful features, that can ease out people’s investment strategy. Even a person with bare minimum knowledge of crypto can start investing in our super user-friendly application, starting with a very little amount.