Influencers, Memes And More—FOMO Drives Crypto Deeper Into India
FOMO is driving crypto deeper into India with users from smaller cities growing rapidly.
'Like thoko!' or hit the like button—that's how comedian Tanmay Bhat signs off on most of his videos. Usually, these are a comic takedown of a movie or a social trend maybe.
But in April this year, Bhat took to his YouTube channel with over 7 lakh subscribers with an explainer: "How Does Bitcoin Work? Watch this video till the end because as I speak, the financial world is going through a slight bit of a change and I don't think you would want to be left out of the conversation," Bhat tells his audience.
As of Sept. 22, the video had over 2.75 lakh views and 1,800 comments. In the description box with the video, Bhat listed a whole host of applications he uses, including CoinDCX. It is not clear if the video was sponsored by CoinDCX, but the platform features prominently on Bhat's channel. Bhat did not respond to messages or calls by BloombergQuint.
Bhat is not alone. In the last few months, content creators such as Dolly Singh and Kusha Kapila, cricketer Dinesh Karthik, author Durjoy Datta and actors Mouni Roy and Radhika Apte have all jumped onto the crypto bandwagon.
Each influencer brings own touch, drawing in fans.
Cricketer Karthik, for instance, compared buying cryptocurrencies to wicket-keeping—an experience that left him stumped.
Crypto exchange WazirX, backed by Binance, the world's largest exchange by trading volume, said that influencers are playing a huge role in demystifying crypto technology for their audience. "The idea is not to promote get-rich-quick schemes but spread awareness," said Nischal Shetty, chief executive of WazirX, in response to BloombergQuint's queries.
Tanmay Bhat, comedian
More Visibility, More Users
Influencers are only one of the tools being used by crypto exchanges in India to drive adoption. With money being no bar for these venture capital-backed platforms, all available channels are being used to drive adoption.
Turn on IPL and you'll see an advertisement that says buying Bitcoin from the CoinSwitch Kuber app is a five-minute process and requires just Rs 100 to get started. Go on to social media and you'll see a flood of memes, including one telling you to 'click right' on crypto. Another says a portfolio is worthless without crypto.
For the more serious readers, there are paid articles on news websites.
Through all of this, risk factors are typically mentioned, although, in some cases, as an afterthought.
The tactics are working.
Crypto investments in India jumped from around $923 million (about Rs 6,900 crore) in April 2020 to $6.6 billion (Rs 49,500 crore) by May 2021, Bloomberg reported, citing data from Chainalysis, a cryptocurrency solutions platform.
The market is also deepening beyond metro cities.
WazirX said it has recorded 2,648% growth in user sign-ups from tier 2 and 3 cities in the last year. Ahmedabad, Lucknow, and Patna have reported an average growth of 2,950%, whereas cities like Ranchi, Imphal and Mohali have reported 2,455% growth. In 2021, such smaller centres contributed 55% of all total sign-ups.
CoinSwitch Kuber claims to have over 10 million users, more than half of whom are from tier 2 and 3 cities, said Ashish Singha, chief executive of the company.
None of this data is publicly available. As such, BloombergQuint cannot independently verify it.
The FOMO Factor
While exchanges say they are trying to educate users and some users may truly believe in the power of cryptocurrencies, many new entrants are coming in simply because of the fear of missing out.
Suraj Pawar, a 22-year-old engineering student, said that the Rs 10,000 investment in Bitcoin he made in May had dropped considerably by July. FOMO is what drove him to invest.
A 20-year-old graphic designer, speaking on the condition of anonymity, said he missed out on the stock market rally of 2020. So, crypto seemed like a better alternative to cover up, he said.
"All my savings are managed by a financial advisor and he suggests equity, bonds, and a few LIC policies," said Rohit Padgaonkar, a 24-year-old working professional. He, however, has still bought some Ethereum because "half of the world is convinced it'll be the future".
"All my friends have invested. I'm OK with risking some money right now, rather than regretting later," Padgaonkar said.
With Rising Interest Come Rising Risks
As interest and adoption rise, the choices for regulators and policymakers are getting tougher.
In April 2018, the RBI introduced a circular barring banks from supporting crypto-related transactions. The circular effectively brought cryptocurrency trading to a halt in India. Later, in March 2020, the Supreme Court struck down the circular. A proposed crypto bill is likely to define the future of virtual currencies soon, but is still under discussion. Any future curbs on crypto holdings will be tougher to impose as usage widens.
In the absence of an overall legislative framework, rules are difficult to frame as well.
"There is no legal accountability," said Rashmi Deshpande, partner, Khaitan & Co. "There is no clarity on how to treat the income under income tax as well as GST."
Equally, there is no way to stop irresponsible advertising and marketing either. A recent notice by the Delhi High Court asked crypto exchanges to have a line of text smaller than the standard size stating, "Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks."
But enforcement is difficult since these businesses are not regulated by any specific regulator. Crypto exchanges claim they are doing their bit to remain responsible.
"We take extreme caution while working with influencers considering the impact their message can have on the audience. We ensure that only factual information is given out and enough due diligence is done," said Singhal of CoinSwitch Kuber. "We also encourage influencers to let their users know that crypto is not a get-rich-quick scheme and that they need to do their own research."