Cryptocurrencies and their adoption across India has often been shrouded in grey clouds. Most of the mistrust stems from lack of knowledge and misinformation. However, it is notable to see Cryptocurrencies gradually gaining popularity across the general populace. As an increasing number of new investors usher into the market and the need for broader utilization arises, blockchain tech has emerged as a burgeoning sector. This growth was also spurred on by the DeFi(decentralized finance) boom that occurred in 2020. Things are looking up for the cryptocurrency industry and investors alike.

The StartupCity editorial team spoke to Darshan Bhathija, a blockchain entrepreneur about all things cryptocurrency. Darshan is the co-founder & CEO for Vauld, a crypto bank and exchange that enables customers to lend, borrow and trade their crypto assets from a unified platform. Founded in 2018, Vauld had raised $2 million from a clutch of investors including Pantera Capital, Coinbase Ventures, CMT Digital, Gumi Cryptos Capital and LuneX Ventures in December 2020. The blockchain entrepreneur and finance domain whiz spoke to us about the growth factors affecting the Cryptocurrency industry in India, the need for well chalked out regulations and much more.

StartupCity: Indian Crypto Banks and Exchanges have seen a massive growth amid the rising COVID-19 crisis. In your opinion what have been some of the most critical factors driving this growth in the past few months? How much has the crypto industry grown over the past year?

Darshan: The crypto space started with the thesis that money (currency and banking regulators) and the state need to be separated because of the clear conflict in incentives.

So crypto as an asset class ends up thriving every time the broader economy performs poorly, just like gold - simply because people want to diversify from state-controlled traditional asset classes.

The explosion of the market capitalisation by 400% since Jan 2020 is because:
• RBI needed to increase notes in circulation because covid weakened the economy, hence people looked for assets other than INR.
• Some institutions and governments have started to acknowledge this asset class is here to stay. It's new and has fundamentally different properties from the equity, commodities, and debt markets.

Market cap in Jan 2020: $240 billion
Market cap in Jan 2021: $1.01 trillion

StartupCity: What steps are crypto platforms and companies such as Vauld taking in order to boost this trend? In your opinion what must these firms do differently to attract a larger and more diverse consumer base?

Darshan: Firstly, crypto was always a millennial asset class, hence millennials (including women) were always investing.

That said, this is what the platforms have done to attract a more diverse consumer base:
• They have reduced the intellectual barrier of entry - similar to the transition led by zerodha for public markets
• They have begun to work with regulators on compliance/legality.

What must we do:
• Work closely with the regulators to build a compliance framework consistent with the US, and Singapore
• Change the narrative of the asset from "Is it even legal?" to "why this asset class? What does it bring to the table/what's new?"

StartupCity: What steps can the government take towards creating regulations to fuel the growth of the Indian cryptocurrency landscape?

Darsha: There should be taxation on the fees earned by the platforms and appreciation earned by the investors. A circular should be released to the banks with a green light to work with the companies and assets. Let existing licensed companies (banks, payment gateways, PPIs, NBFCs) add support for the asset. Draft a clear set of dos and don'ts for crypto companies to follow until they're ready to regulate.

Give crypto companies a way to report suspicious transactions, just like the requirements for banks. Also, don't threaten to jail the consumer or entrepreneurs.

StartupCity: Vauld has been in the market since 2018; how has the Indian cryptocurrency landscape evolved since then? How can VC sentiment change pertaining to investing in crypto platforms and companies over the past two years?

Darshan: Entrepreneurs have been working hard to innovate on the application and protocol lays which has led to world class products and infrastructure to be built by the Indian teams.

The western VCs have embraced the opportunity of cryptocurrencies thriving in India and have backed the best teams. Indian VCs haven't invested in the space as of yet but they're keeping a close eye, so it is very encouraging for the future.

StartupCity: Is Vauld looking towards raising capital in the near future? Drawing from your prior experience of raising Venture capital, what are some pointers that entrepreneurs & young firms keep in mind while preparing to raise funding?

Darsha: Very likely. Crypto entrepreneurs need to work on the fundamentals of building long lasting companies, just like founders in any other space.

Entrepreneurs must focus on building something people want without a compliance trade off.

The crypto investor community is small, so ask for introductions from the founders of companies that have already raised funding. Also, focus on getting one high quality investor known in the crypto space and the rest will invest almost immediately.

If the investor needs an explanation of how bitcoin works, you're speaking to the wrong investor. They're not going to back you.