A Growing Interest for Crypto Derivatives Seen in India

Sumit Gupta, the CEO of CoinDCX said earlier this year, “We witnessed a huge demand for futures trading among Indian crypto users”.

This came out while Unocoin, an Indian cryptocurrency exchange still finds itself tangled in a major court case regarding cryptocurrency regulation. The case started in 2018 when the police seized an ATM that Unocoin was running for cryptocurrency. The reason for the seizure was the fact that crypto is yet to be regulated by the Government of India. As long as a decision doesn’t come out, there is no saying whether or not cryptocurrency dealing will be openly allowed in India.

Regardless of that matter, people are still very much interested in cryptocurrency. However, due to the case, they are reluctant to do so because of the current stance against the use and dealing of cryptocurrency. Without proper regulation, it becomes quite difficult for people to actively engage in crypto. The co-founder of Unocoin, Mr Sathvik Vishwanath agreed to his colleagues perspective, while expressing the concern for what such bans could do for the crypto market in India, “while we believe it is pretty much the time to launch a derivatives market, the restrictions from Reserve Bank of India on banks is making the on-ramp and off-ramp complicated and is keeping the average customer away.”

However, the interest still seems to be growing with the exchange seeing more than 26,000 active users every month. Currently, the platform is crypto-only but there are plans for derivates options to be launched in the coming months. On the same note, the CEO of Mumbai based Delta Exchange is also working on bringing derivatives to users said the company’s CEO Pankaj Balani. Mr Balani is also an experienced derivatives trader with prior experience with Union Bank of Switzerland. He founded his company around the same time when Unocoin got their ATM seized.

The developments have not phased the interest of the public or the efforts of the company either, apparently. Delta Exchange recently launched some new exotic options meant for both Bitcoin and Ethereum. This is to allow the users to have different leveraged betting options, depending on how big the changes are in the prices of both cryptocurrencies.

Derivatives have a lot of potential for cryptocurrency as well, as Balani pointed out, “If you look at daily FX trading … derivatives are four to five times the size of spot markets, but in crypto, this isn’t true yet.”

According to Saurabh Goyal, the co-founder of Delta Exchange, the biggest challenge that the market is facing to reach those kinds of numbers is the scaling. With relatively smaller platforms, it is not yet possible to push for such numbers. However, while the local startups may be facing these obstacles, there are bigger players on the scene now. The growing demand for cryptocurrency in India is no longer a local phenomenon. In fact, it has only been a few months since one of the largest cryptocurrency exchanges in the world, Binance, acquired WazirX, one of India’s biggest digital assets platforms.

While this news is certainly huge, it is expected to soon be dwarfed out by others. The world is looking at India as a potential market for cryptocurrency and there are certainly going to more acquisitions to follow after that of WazirX. With a population of well over a billion people, India is a huge land of opportunity, so to speak, for cryptocurrency. And with its super-active IT-oriented market, the attraction for crypto is quite natural.

Kumar Gaurav, the CEO of an Indian crypto banking platform by the name of Cashaa also said that the platform is not seeing a monthly growth of 150%. With about 1000 bitcoins worth of trading happening daily, he believes that the people involved in this activity are trying to get into the derivatives market at the earliest.

He is quite positive about the current demand for derivatives in India. He said, “Before the regulatory hurdles, Indian exchanges were doing $50-60 million in daily volumes and we can expect this volume to come back soon.”

All this demand by the Indian population has to be met somehow and that is where the competition comes in. The current leader in the Indian market for crypto trading is BitMEX. However, Balani and his team are positive about their company’s growing popularity. The company has seen more growth in its platform than any other nation since the start of 2020. According to Balani, up until now, the company has already facilitated the trading of more than $300 million every month since the start of 2020.

With more than 30 contracts available with Delta Exchange as compared to 10 with BitMEX, a researcher at Delta Pooja Shah is confident that Delta will be preferred by traders for all future trading.

Regardless of who comes out on top, what is clear is that India is expected to see something big in its cryptocurrency market during 2020. And for a country this size, it could end up having a noticeable impact on cryptocurrency globally.

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