Why Zerodha’s Nithin Kamath Fears Crypto Disrupts Online Stock Brokers


Nithin Kamath, co-founder of online brokerage firm Zerodha, said today that the industry should be wary of being disrupted by cryptocurrency and not by any other stock brokerage startup, although she is “still small in India”.

In a series of tweets, billionaire Kamath explained why he feared him, especially for new-age online brokers or even stock exchanges. He said that in the business of brokerage or trading, both price and product, there is not much left to disrupt. “Unless, of course, someone finds a way to pay people for the trade (brokerage is not allowed by regulation) or a way to help all clients make money.” , did he declare.

Brokers and exchanges depend on a small group of active traders, around 1 million traders for their income. If they start trading something else, it will disrupt everything, he said, adding that active traders also provide liquidity, reduce costs and impact risks, and help better price discovery.

Explaining further, he said traders want high leverage, volatility and markets open for longer. Type of crypto scores on the shares on them. “Of course, crypto trading is much riskier and there is no fundamental information for price movements. But greed usually takes over most people over time.”

Kamath also pointed out that crypto is what recently disrupted brokers and exchanges in the United States. Coinbase’s AUM is $ 180 billion, and Robinhood Crypto’s crypto AUM is around $ 11.5 billion, he said. “Many incumbents could not react quickly, fearing a backlash from the regulations and especially missed the bus,” he added.

However, Kamath said, “Although Crypto is still small in India, we are in a similar situation to the United States a few years ago. Regulatory fear does not allow regulated platforms to offer crypto. Eventually, if the regulatory status quo continues, traders can walk away and disrupt the brokerage industry. “

Nithin Kamath and Nikhil Kamath are India’s richest self-made billionaires under 40, according to IIFL Wealth and Hurun India’s 40 and Under Self-Made Rich List 2020. Nithin and Nikhil Kamath are the richest entrepreneurs under 40 years in India with a wealth of ??24,000 crores.

Meanwhile, within 15 months of starting operations in India, CoinSwitch Kuber claims to have become the largest cryptocurrency exchange in the country in terms of the total number of registered users on the platform. It hit the 10 million registered user mark this week.

“CoinSwitch Kuber has reached the milestone in just 15 months since it began operations in India in June 2020, a testament to the simplicity and convenience that the platform offers its users,” the company said in its official press release.

Out of a total of 10 million users, 7 million are active users on the platform with a monthly transaction volume of Rs15,138 crore, according to the company.

The platform is seeing maximum participation from Millennials and Gen Z people. About 75% of its total users are between the ages of 18 and 35, while the average age is 24. It claims to attract investors from over 4,000 cities across the country, with nearly 55% of users belonging to Tier 2 and 3 cities.

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