Cryptocurrency continues to captivate India’s younger generation despite persistent challenges of volatility, cybersecurity risks, and a lack of regulatory clarity. With advocates championing its potential and critics questioning its value, the crypto debate remains highly polarizing in India.
Shiv Pande, a fixed-income investment advisor based in New Delhi, is one of many Indians drawn to the allure of crypto assets. Initially skeptical, Pande spent a year researching cryptocurrencies before cautiously allocating 1-2% of his monthly investments to Bitcoin, Ethereum, Arbitrum, and Uniswap in mid-2022. Over time, his confidence grew, and today, nearly 30% of his portfolio comprises crypto assets.
“My two-year compound annual growth rate (CAGR) has been roughly 150%,” said Pande. However, he balanced his investments with traditional options like mutual funds, ETFs, and the National Pension System to mitigate risks.
At the Mint Money Festival held on 22 November, Ashish Singhal, co-founder of the crypto exchange CoinSwitch, emphasized the opportunities and dangers associated with cryptocurrencies. “At least 4-6% of the portfolio should be kept in crypto. But I emphasize it is a risky investment. They should diversify in other asset classes too,” he advised.
Data from CoinSwitch highlights the extreme volatility of cryptocurrencies: Bitcoin rallied 50% in 2024 after a steep 64% decline in 2022. The standard deviation of Bitcoin’s price—a measure of its volatility—stands at 155%, compared to 13% for the S&P 500.
For Singhal, an engineering graduate who studied computer science, the appeal of blockchain technology—the foundation of cryptocurrencies—is its transparency and decentralization. “Blockchain can replace people and their biases with technology. We should rely on facts and data to evolve financial ecosystems,” he stated.
Critics, however, argue that cryptocurrencies like Bitcoin lack intrinsic value, likening their speculative nature to gambling. Singhal countered by comparing Bitcoin to gold: “Just as gold is valuable because it is precious and scarce, Bitcoin derives its value from its limited supply and utility.”
The lack of regulatory oversight in India further complicates the crypto landscape. While other nations like Dubai and Singapore have embraced blockchain innovation, India imposes a 30% tax on crypto profits and a 1% tax deduction at source (TDS) on transactions exceeding certain thresholds. Singhal lamented the lack of recognition for cryptocurrencies as an asset class, stating, “Until regulations are introduced, innovation will not happen.”
Cybersecurity risks also deter potential investors. In July, crypto exchange WazirX suffered a massive breach that wiped out $230 million of user funds. Singhal highlighted the need for robust custodial solutions, explaining how CoinSwitch safeguards user assets through its in-house infrastructure.
Despite these hurdles, cryptocurrencies have gained traction globally. President-elect Donald Trump has expressed ambitions to make the U.S. the “crypto capital” and integrate Bitcoin into the national treasury alongside gold. Moves like these could further fuel demand and drive up Bitcoin prices, Singhal predicted.
While India’s crypto journey remains fraught with uncertainty, advocates like Singhal envision a future where blockchain technology reshapes financial ecosystems and empowers individuals through decentralized, transparent transactions. For now, the crypto market remains a high-stakes gamble, drawing in the brave and the curious alike.
