Ban on crypto assets notwithstanding, WazirX believes the future is in cryptocurrencies
The RBI may have banned banks and all other registered financial entities from facilitating any crypto transaction, but WazirX offers P2P money transfers and allow customers to buy cryptos.
Founders: Nischal Shetty, Siddarth Menon, and Sameer
Where it is located: Mumbai
The problem it solves: Platform for exchanging crypto currencies
Founding year: 2017
Funding: Rs 50 lakh
Running marketing platform Crowdfire, three young men saw the potential in cryptocurrencies and believed it would change their lives.
The prices of Bitcoin soaring to $12000 last year led Nischal Shetty, Siddarth Menon, and Sameer to also see the merits of cryptocurrencies in handling trade because of their decentralised nature, and their ability to take away the power of issuing and regulating currency by central banks. The trio founded WazirX in early 2017, and began building the technology to enable trading and exchange of cryptocurrencies.
“We decided to venture into the world of Blockchain technology and cryptoassets after getting acquainted with its massive potential and future growth prospects,” says Nischal, Founder and CEO of WazirX. He adds the intent was to launch a cryptoasset exchange that was India centric.
Cryptocurrencies and Blockchain are two big financial use cases in the future. Blockchain is a record of transactions that brings all parties onto a single platform with seamless information that cannot be tampered with.
Cryptocurrencies are ‘mined’ when a Blockchain transactions are tallied, verified and added to a Blockchain leger. These assets can then be used as a substitute for cash to pay for goods and services, and therein lies the challenge.
Say you want to pay for your coffee in Bitcoin. How does one pay the value of $3 in the cryptocurrency when a Bitcoin is priced at $6600. This is where WazirX comes in, allowing you to pay in fractions. A customer can thus pay 0.00045 Bitcoin for his coffee.
Nischal, Siddarth and Sameer spent all of 2017 building the platform and launched it in January this year.
The crypto space has, of late, come under much scrutiny from the government. While the government and the Reserve Bank of India have not per se made crypto currencies illegal, they have banned banks and all other registered financial entities from facilitating any crypto transaction. The government and central bank, with the move, are looking to protect the investors and ensure black money does not move through the system.
Following the government move, one can now only buy and sell crypto assets on the WazirX platform through a peer-to-peer transaction. Say you want to buy a crypto asset from someone in France, you deposit money in WazirX’s escrow account, and the cryptos be released. This can be a bitcoin purchase which is trading at Rs 6600.
In the beginning
Nischal has a degree in Computer Science from Visvesvaraya Technological University, and started his career as a software engineer. He also happens to be a Blockchain influencer on Twitter. Siddharth has a product design background with over a decade in product building and Sameer is a developer who earlier worked in Network18.
“With WazirX, the idea was to create India’s very own and most trusted crypto assets exchange, enabling Indians to build up their digital assets by buying, selling or investing in digital assets, such as Bitcoin, Litecoin, Ethereum and Ripple. In addition to supporting the leading crypto-currencies, WazirX has also launched its own digital asset, WRX,” says Nischal.
WazirX launched pre-signups on the platform on January 31, and went ahead with free giveaways of 150 million WRX coins to early adopters of the platform. WRX is WazirX’s own crypto coin. The WRX giveaway is still active and will remain active until all the 150 million coins are disbursed. In March, WazirX was launched on all three platforms - web, Android and iOS – and on Android, it commenced operations with three crypto assets - Bitcoin, Litecoin and Dash. “We presently allow trading in Bitcoin Cash, and Ripple as well. We will be launching new coins every week,” says Nischal.
Today they are allowing people to buy crypto through P2P transfers. There is regulation on P2P lending and not P2P money transfers using platforms like PayPal or WhatsApp.
The Peer-to-Peer transfer carries the glimpse of a decentralized future, allowing users to seamlessly buy and sell crypto for INR directly with each other. WazirX will be at the centre of these transactions, connecting the person looking to buy crypto for INR with someone who’s looking to sell crypto for INR. As part of the innovative approach, the seller deposits the crypto with WazirX, which the brand escrows for safekeeping during the transaction. On the other end of the spectrum, the buyer pays INR to the seller and as soon as the seller confirms receipt of the payment, WazirX releases the crypto to the buyer.
The business model is driven by transaction fees of 0.1 percent per transaction. The platform has 50,000 registered users on the platform trading cryptocurrencies.
Will regulation help cryptos?
Most Indian crypto companies are registered overseas such as in Singapore or Estonia to cash in on the bitcoin boom. WazirX, however, is registered in India. The company did not disclose its revenues and is awaiting a final court order on cryptocurrencies after the Supreme Court upheld the RBI circular stopping banks from facilitating crypto exchanges to maintain accounts. The next hearing is on the July 20.
In its circular, the RBI said, “Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.”
“I’d like to compare the market opportunity to that of the existing stock exchanges in India, where nearly $10 billion worth of transactions take place every day. I definitely foresee cryptoassets achieving the same figures five years down the line,” says Nischal.
Recently, crypto exchange Zebpay stated the rupee deposit and withdrawal options on its app would be removed. Throughbit, the crypto currency exchange was questioned by tax authorities to ensure if taxes had been paid on transactions.
Such is the state of affairs in the crypto world as believers, asset holders and central governments are locked in battle. WazirX, however, believes the future holds promise.