The year was 2018ish. RBI had imposed a blanket ban on all banks interacting with centralized exchanges. As a result, all the banks stopped the movement of INR from bank accounts to your CEX wallets. Later, these exchanges filed a case in the Supreme Court. The ground was that one could not stop anyone from conducting a legal business in the country.
The Supreme court asked the RBI if crypto was illegal. Once they said no, deposits were resumed. However, soon enough the industry was hit by a bear run, specifically during the Covid.
But then something unprecedented happened. Yes. That word comes up quite often in the post covid world. 2020 saw a massive dip and an even harder pump. Both stocks and crypto started rallying like never before. A lot of it could be attributed to excessive liquidity in the market. When more money was given in the hands of the general public, it was expected that they would spend it. Instead, they invested.
And the obvious side effect of this was the rise of the great Indian fintech ecosystem. A lot of fintech startups attained the coveted unicorn status. One such startup was CoinDCX. For the uninitiated, it is an Indian, centralized crypto exchange.
But whatever happened after that was uncalled for.
Okay. A lot of startups do it. And that's fine. However, the way Indian exchanges did it was unique. They picked up the hottest slots in most watched television shows. And started selling the dream to the common man.
Once again, so far so good. But if you look closely, the theme behind these ads had the potential to offend our already sensitive government. Let's find out how.
Once you get the mindshare of people, what is next?
"Yes, they are now talking about BTC. But we need a final nail in the coffin."
This was indeed a master stroke. Most of the newbies I met always used to think how expensive BTC is. It kept them away from this space. However, these exchanges started giving Rs. 100 worth of BTC for free.
Not only that, it was coupled with a few referral schemes so that you could now earn while bringing your friend to the party.
How can any government in the world accept that? You are essentially creating hooks for the general public to flock on to your platform with no potential downside. All this while you are completely aware of the gambling tendency of cryptoverse.
One good thing that came out of the VC money is impeccable user experience. Buying crypto was seriously made simpler. Some of these exchanges also came up with crypto parlances of traditional finance products like SIP.
But all bells and whistles on the platform were intended to celebrate your arrival, purchase of crypto. It had an unconscious impact on the user's mind. They would have rather introduced nudges at each step to warn the user of what they are getting into.
And if you think it is detrimental to their own cause, check out Kite by Zerodha. The platform has introduced features like 'Kill Switch' that prevent users from over-trading.
The Indian government has taken notice of this madness. They introduced 1% TDS to essentially kill trading and hence these exchanges in the country.
Recently, they also banned all celebrity endorsements in crypto. After all, they have a huge influence on the masses.
Best way to approach this space would have been through education. Most of these exchanges have dedicated arms for that. However, it should be prioritized over revenues. You conduct your due diligence and then invest. Not the other way round!