Cryptocurrency: Exchanges say wealthy individuals taking a shine to it

Media reports suggest WazirX, India’s largest crypto exchange by volume, has formed an exclusive team that specialises in executing high-value bulk trade to meet the increasing demand from High Net-Worth Individuals (HNIs). According to the company’s founder Nischal Shetty, HNIs are allocating 3% to 5% of their asset portfolio towards crypto.

It is no surprise that HNI’s contribution to cryptocurrency has increased. As per the Knight Frank’s Wealth Report 2020, despite global headwinds, even Indian ultra-high-net-worth­-individuals (UHNWIs) holds a 1% percentage proportion of the average investment portfolio invested in cryptocurrency amongst the other asset classes.

The management of the WasizX has witnessed 30 times increase in its users especially amongst HNIs and the family offices who trade over USD25 million a month and are keen on buying crypto worth over USD100,000.

ZebPay, with over 4 million users and over USD1 billion in monthly transaction volumess, has ZebPay OTC, a trading desk especially for high-volume clients that caters to both individuals and institutions.

Current scenario

In terms of regulations framework for cryptocurrencies, India still has not laid out any rules and regulation. In the absence of any regulatory framework, cryptocurrency exchanges claim to self-regulate themselves by ensuring there is a proper KYC compliance.

Risks

It is crucial to understand the risks that come with these investments. That said, before investing in any asset class, one should first invest in educating and understanding financial assets. The same may be said for digital assets, as there are a lot of initiatives out there that have cryptocurrencies attached to them.

As an investor, one should try to avoid getting excited or demotivated when the cryptocurrency prices increase or decrease. Investors should be extra careful, especially from companies selling fake currencies in consideration of giving high returns.