Media reports from November indicated that cryptocurrency exchanges and trading platforms were exploring diversification into non-crypto products or developing adjacent offerings in the Web 3 space due to regulatory uncertainty and subdued demand for cryptocurrencies. Coinswitch’s entry into the stock trading market will place them in a highly competitive landscape led by Zerodha and other new-age investment platforms, as well as established stock brokerages like ICICI Securities, HDFC Securities, and Sharekhan.
Image-: Fortune India.
Coinswitch, a Bengaluru-based cryptocurrency trading platform backed by Tiger Global and Andreessen Horowitz, is gearing up to venture into the Indian stock trading market, challenging the likes of Zerodha, Groww, Upstox, and Paytm Money. The company, which previously focused solely on cryptocurrencies, aims to expand its offerings to include conventional investment products such as mutual funds and US stocks. Despite the recent recovery of bitcoin prices, which had been on a downward trend, they remain significantly below their peak in November 2021.
Sources reveal that Coinswitch intends to apply for a stockbroker’s license with SEBI (Securities and Exchange Board of India) and is also engaging in discussions with non-banking financial companies (NBFCs) and banks to provide fixed deposits. The decision to shift the company’s focus towards Indian stocks was prompted by the imposition of higher tax rates on foreign remittances for retail investment in US stocks under the Liberalised Remittance Scheme (LRS).
The prolonged downturn in cryptocurrencies has resulted in the filtering out of non-serious investors. As serious investors typically diversify their investments across various instruments, Coinswitch aims to capitalize on this shift in investor sentiment by offering alternative investment options. Ashish Singhal, co-founder, and CEO of Coinswitch, confirms the company’s ambition to become a comprehensive wealth-tech platform. Singhal mentions that they have several new products in the pipeline and will share further details when announcing them. The goal is to introduce these products by the end of the current financial year.
Media reports from November indicated that cryptocurrency exchanges and trading platforms were exploring diversification into non-crypto products or developing adjacent offerings in the Web 3 space due to regulatory uncertainty and subdued demand for cryptocurrencies. Coinswitch’s entry into the stock trading market will place them in a highly competitive landscape led by Zerodha and other new-age investment platforms, as well as established stock brokerages like ICICI Securities, HDFC Securities, and Sharekhan.
Reports from April highlighted a slump in the online stock broking segment among startups, despite their exponential growth during the pandemic. Upstox, backed by Tiger Global and previously ranked second in terms of active users among discount brokers, experienced a significant decline, losing around 2.6 million active users since June 2022. Similarly, 5Paisa, a listed discount broker, witnessed a drop of one million active customers. New client additions also declined by 60% during the October-December 2022 period compared to the previous year, as reported in the company’s third-quarter results. Zerodha, too, saw a decrease of approximately 200,000 active users between June 2022 and March 2023.
These figures represent the net count of active users, taking into account both customer additions and losses. The market downturn has clearly impacted the online stock broking segment, highlighting the challenges faced by industry players.
