Ultra-rich Indians have mixed feelings about cryptocurrency

The bygone year saw a monumental increase in the popularity of digital assets like cryptocurrencies and NFTs around the globe. Here is how the super-wealthy in India are responding to it.

nvestments in cryptocurrencies saw an unprecedented surge in 2021, as people from across the globe bet big on their use in economies reviving from the effects of a pandemic. India accounted for a major proportion of these investors, and a new report hints that the numbers don’t just represent the average joe in the country looking to make quick bucks on a Bitcoin surge. About 20 per cent of the super-rich Indians also put their money in the crypto assets.

A new report that sheds light on the crypto investment surge in the bygone year notes that 18 per cent of ultra-high-net-worth individuals (UHNWI) invested in crypto assets in 2021. Of these, cryptocurrencies and tokens took the obvious precedence, just slightly outnumbering a considerable portion of investors who were lured by NFTs or non-fungible tokens as a legitimate investment option.

The numbers have been shared in a new report by Knight Frank India. The report identifies UHNWIs as individuals having a net worth of $30 million (about Rs 226 crore) or above. It notes that 18 per cent of the ultra-wealthy in India have invested in crypto assets. Of these, 10 per cent opted for some form of cryptocurrency, including major coins like Bitcoin and Ethereum as well as noted crypto tokens, as the best option to put their money on. Meanwhile, 8 per cent of UHNWIs in India invested in NFTs as digital assets became the hot topic of the year 2021.

“2021 was the year that crypto investments went mainstream,” the report mentions. It cites The Economist magazine to point out that the total value of crypto assets across the globe skyrocketed to $2.4 trillion by the end of 2021. This is a 12-fold increase in the figures noted for early 2020.

Mixed indications

The report shows two sides to the story of crypto investments in India. While investors in the country now have clarity on the government’s stance on crypto assets, this wasn’t the case back in 2021. Before the new crypto taxation laws proposed under the Finance Bill 2022, cryptocurrencies and other digital assets like NFTs, were largely considered to be a grey area for investments.

More so, by the super-rich strata of the country. Some embraced the idea of a virtual currency and put their money where their heart was. Though the majority of the class stayed away from it. The most cited reason for this was the lack of understanding of the crypto market, which now has over 8,000 different cryptocurrencies and tokens to choose from.

Another deterrent is the volatility of crypto assets, which has been seen time and again, with the sudden surge and drops in the value of Bitcoin, Ethereum, Ripple, or any other crypto asset for that matter. While it is a highly alluring prospect for many investors, people at large stay away from cryptocurrency investments in fear of losing their money in a jiffy.

Some of the well-known personalities from the ultra-rich class of India have publicly voiced their concerns with cryptocurrencies and other blockchain-based assets. Rakesh Jhunjhunwala, the ace investor known widely for his accurate predictions of the equity market, boldly said earlier this month that the crypto market will collapse one day. In an interview with ET Now, he went on to add that the demise of crypto will not even have a major impact on the equity market.

Anand Mahindra, the celebrated businessman who serves as the Chairperson of Mahindra and Mahindra, took to Twitter late last year to clear allegations of him having earned “tens of thousands of dollars” from crypto investments. Dismissing the reports, he clarified that he has “not invested a single rupee in cryptos.”

Published By : India Today

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