Crypto exchanges and funds have seen an uptick in investments – upwards of Rs 1 crore – by family offices and wealthy individuals, amid increasing global institutional acceptance of crypto currency.
India’s largest crypto exchange by volume, WazirX, recently created a dedicated over the counter (OTC) team that executes high value bulk trades to meet increased demand from high net-worth individuals to procure crypto.
These individuals are allocating 3% to 5% of their portfolio for crypto, with bitcoin being the most popular, said Nischal Shetty, chief executive of WazirX.
“The number of HNIs have been larger than the last 8-12 months, in comparison to the last two years,” Shetty said. “I think they all want exposure because they believe in hedging and in having a diverse portfolio.”
According to Siddharth Menon, the chief operating officer of WazirX, the platform has seen a 30x increase in user sign-ups by HNIs and family offices who trade over $25 million a month or want to buy crypto worth over $100,000.
These funds get specialised services, including customised trading reports and support with taxation and compliance.
ZebPay, another crypto exchange, started offering OTC services last year.
It offers “personalized service to institutions and individuals” looking to purchase a minimum of 5 bitcoins, which at current rates cost $150,000 or over Rs 1 crore.
The exchange executes trades amounting to several million dollars every month, Vikram Rangala, its COO, told ET.
“It is growing quite substantially in India. Family offices are also looking to diversify into crypto. They may have started with holdings in blue chip stocks, and then gold. But now a lot of them are coming to us looking for bitcoin,” said Rangala.
In future, ZebPay wants to offer full-service wealth management for wealthy clients to help build a diverse digital asset portfolio, including nonfungible token (NFT) art collectibles.
Licensed advisors and wealth managers are shying away from offering formal guidance to clients in the absence of cryptocurrency regulations in India, which make it a legal grey area.
In the absence of formal advice, wealth advisors who handle the investment portfolio of family offices are educating themselves by taking courses in crypto.
Most of the exchanges onboarding such clients are offering round-the-clock support, a dedicated relationship manager and personal involvement and guidance from top leadership at these exchanges.
According to a recent report by PriceWaterhouseCoopers, the total assets under management of crypto hedge funds increased by 90% in 2020 globally, with the vast majority of investors in funds being either HNIs or family offices.
Several industry experts said that in the last one year wealthy investors have begun to consider bitcoin as a serious asset class – which means they are looking at it as a long-term investment.
Sachin Jain, cofounder of Amesten Capital, said crypto had come a long way from 2017, when serious investors with risk appetite saw it as a quick return scheme.
“People are no longer looking at it as a speculation. The same people are seeing it as a future currency or a store of value,” said Jain, who offers portfolio management services to HNIs and institutions, and has about $15 million AUM.