India’s largest stockbroker Zerodha has been overtaken by some of the country’s popular crypto exchanges in the number of users. 

Zerodha has a little over 7 million users, of which almost 5 million are active users. Active users are defined as those who have conducted at least one trade in a year. 

Coinswitch Kuber has a userbase of 11 million, said Ashish Singhal, its founder and CEO. A spokesperson for WazirX, another large cryptocurrency exchange, said it has a userbase of 8.5 million. 

To be sure, the userbase of stockbrokers is reported to exchanges such as National Stock Exchange and BSE, and have a greater degree of independent verification.

Coinswitch Kuber recently became India’s second crypto unicorn after it announced a Series C funding round worth over $260 million led by US venture capital firm a16z (Andreesen Horowitz) and Coinbase Ventures earlier this month.

It is difficult to estimate India’s total base of stock market investors. According to figures shared by the BSE, there are 8 crore unique client codes (UCCs) registered with it. Individuals can open accounts with multiple brokers and hence get multiple UCCs. 

In the case of crypto, there is even greater opacity in terms of industry numbers. “People tend to open accounts on different crypto exchanges because not all exchanges list an identical universe of tokens. Also, they may wish to shift from one exchange to another for liquity or trust reasons. For these reasons, there is a degree of overlapp in the numbers for crypto exchanges but this is also true for stockbrokers,” said Ajeeth Khurana, founder, Genezis Network, a crypto industry thinktank. According to some estimates, India had around 1.5 crore crypto investors around the start of 2021. This is likely to have gone up considerably.

On 9 September, Zerodha founder Nithin Kamath tweeted that new-age online brokers will not be disrupted by another stock brokerage firm. Rather the disruption is likely to come from a crypto exchange. 

“Crypto is what has recently disrupted brokers & exchanges in the US. The AUM of Coinbase is $180 billion, and the crypto AUM of Robinhood Crypto is around $11.5bil. Many incumbents couldn’t react quickly, fearing regulatory lash back and mostly missed the bus,” he tweeted. 

“While Crypto is still small in India, we’re in a similar situation as the US, a few years back. The regulatory fear doesn’t allow regulated platforms to offer Crypto. Eventually, if the status quo on regulations continues, traders can move away & disrupt the broking industry,” he added. 

A bill on banning ‘private cryptocurrencies’ was slated to be introduced in the Budget session of Parliament in February 2021. However, the bill was not tabled and it is still unclear what the legal status of cryptocurrency in India is.

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