New signups, across platforms, were increasing at 10% month on month until October-November in anticipation of a legal framework expected to be put in place in the winter session.
Most platforms, including some of the biggest, have seen a drop of anywhere around 15% to 25% in new sign-ups in December.
Many large exchanges that were adding 40,000 to 50,000 users daily at one point, barely managed half of that in December.
This also comes at a time when cryptocurrency companies have gone
slow on advertising and other marketing campaigns that are aimed at attracting new investors.
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The total number of investors and traders across Indian cryptocurrency exchange is pegged to be around 15 million. The total investment of Indians in crypto assets is currently valued around $6 billion, or about Rs 45,000 crore.
The government has postponed tabling the framework for discussions on cryptocurrency to the budget session. This seems to have spooked new investors.
“Signups in December were lower than what we saw in November, but it’s higher than what we saw 6 months ago,” said a WazirX spokesperson. WazirX currently hosts about 10 million users on its exchange.
Industry insiders say that other large exchanges like CoinDCX have seen a drop in their new sign-ups.
CoinDCX refused to comment on the December drop but claimed its total users are around 7.5 million now. Coinswitch Kuber did not comment.
BuyUcoin, another exchange that was witnessing an average daily sign-up rate of around 8,000 to 10,000, has seen a drop to just below 4,000.
Industry trackers say that the December fall should not be compared to the peak, but with other bearish cycles.
“In December, we received around 1,15,170 signups. Compared to other bearish cycles, the registrations in December have still shown a 28.7% jump in the user base,” said Shivam Thakral, CEO, BuyUcoin, a cryptocurrency exchange that has more than a million users on its platform.
Often the sign-up numbers are used as a metric to value a cryptocurrency exchange. Most Indians now register across platforms and the user base on each platform may also show some shared user base.
The government is discussing with stakeholders whether cryptocurrencies should be completely banned or whether they should be allowed in a limited way where the Reserve Bank of India (RBI) will primarily regulate them, ET reported on December 11.
Several finance ministry officials, the RBI, tax departments and investigating agencies including the Financial Intelligence Unit have raised concerns about how in its current form cryptocurrencies are a “systemic risk”, not just for the country’s security but also to its economy, ET reported.
Officials have also raised concerns over how cryptocurrencies are used and in case of a law allowing them will be continued to be used for “illegitimate untraceable transactions” and this could “substantially reduce regulatory effectiveness.”
RBI has also raised
fresh concerns over stablecoins and said that any crypto asset that’s pegged to the US dollar or any other currency could undermine the Indian rupee.
The central bank officials have raised these concerns with the government in several meetings held recently, ET first reported on December 24. Almost all Indian cryptocurrency platforms are offering stablecoins and some of them are even offering an interest rate—similar to a fixed deposit—of around 12%.
