Mumbai: There has been a dip in new sign-ups on cryptocurrency exchanges, as prospective investors seem to be hedging their bets till regulatory clarity emerges on the asset class.
New user sign-ups are a matrix used to value crypto companies.
Investors have become jittery after the government decided to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the upcoming Winter session of Parliament.
The Bill seeks to prohibit all private cryptocurrencies in India but allows for “certain exceptions to promote the underlying technology and its uses.”
Crypto exchanges have recorded a 15-50% drop in new sign-ups in November so far.
They have also posted a dip in their monthly transactions after some investors squared off positions and adopted a “wait and watch” mode.
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“We have seen a 20% drop in new sign-ups on a week-to-week basis. We have had an average daily sign-up rate of 8,000-10,000 per day during the recent bull cycle. Right now, we’re getting around 5,000-6,000 new users every day,” said Shivam Thakral, CEO, BuyUcoin.
Sources told ET that even some of the largest exchanges such as CoinSwitch Kuber and CoinDCX have been impacted.
A few large exchanges, however, claimed that they had not seen any major changes, especially in the trading patterns of mature investors.
“We have not seen any significant change in these numbers on our platform since we largely cater to retail investors who invest for the long term,” said Ashish Singhal, CEO, CoinSwitch Kuber.
Many investors seem to be opening additional accounts to sell the crypto assets they hold, say insiders.
“We have seen an increase in the number of sign-ups because people who have already held crypto assets through mining or through payments are selling these. So, we see some of the new members depositing the cryptos, selling them, withdrawing the money, and depositing it in their bank accounts,” said Sathvik Vishwanath, co-founder and CEO of Unocoin, a cryptocurrency exchange.
Smaller exchanges said they were witnessing steady sign-ups as people continued to be curious about the new asset class, despite price fluctuation last Tuesday after the government moved to regulate the sector.
“We are currently observing an average daily sign-up rate of approximately 4,000 per day,” said Vikas Ahuja, Member of the Blockchain and Crypto Assets Council (BACC) and CEO, CrossTower, a cryptocurrency exchange.
Industry trackers said transaction volumes had increased in the last few days as investors rushed to sell crypto assets, but that has tapered off since Saturday.
“Transaction volumes have doubled, but that happened for the first two or three days, and we haven’t seen it since Saturday. The people who panicked have already exited and it may remain stable till there is more news about the draft Bill,” said Vishwanath.
Young investors started investing in cryptocurrencies during the lockdown when companies largely moved to work from home.Previous