The year crypto came into its own globally
The blockchain and cryptocurrency space could not have asked for a better year than 2021. Demand for digital assets has exploded across the country. India’s crypto market grew 641% from July 2020 to June 2021, helping turn a region spanning central and southern Asia and Oceania into one of the world’s fastest-growing cryptocurrency markets, according to a Chainalysis report from October. Cryptocurrencies attracted over $30 bn globally, more than in all previous years combined. That’s almost quadruple the previous high of around $8 billion.
Crypto exchanges as well as blockchain-based products and startups attracted the highest ever investor capital, at $638 million as of December in India, according to data provided by industry tracker Tracxn. In December 2021, the electronics and IT ministry released a national strategy on blockchain for adopting the technology in government systems, especially for e-governance services. The ministry has adopted a multi-institutional approach for the national blockchain framework, which includes C-DAC for research and development of the framework, NIC and NICSI for hosting the national-level blockchain infrastructure, and offering blockchain as a service. This is a huge move for blockchain adoption for India.
Through the second half of 2021, reports indicated the Indian government was looking to introduce a framework to define and regulate cryptocurrencies in India. Contrasting reports of outright bans and the possibility of regulating crypto as an asset class led to confusion in the markets as several tokens recorded steep declines in prices in November 2021. Initially, the government announced it would introduce the bill in the winter session of Parliament, with the purpose of creating a facilitative framework for issuing a Central Bank Digital Currency as well as prohibiting private crypto in India. This now stands deferred.
CoinDCX became the nation’s first crypto firm to turn unicorn when it closed a $90 million Series C funding round, led by Facebook Co-founder Eduardo Saverin’s B Capital Group, in August 2021. The Series C funding round raised CoinDCX’s valuation to $1.1 billion. The round also saw participation from existing investors such as Coinbase Ventures, Polychain Capital, Block.one, Jump Capital, among others, alongside other veteran investors.
This set the tempo for major institutional fund flow and India saw a major influx of institutional investment in this space. Following the entry of B Capital Group and Coinbase Ventures in India with the CoinDCX round, India saw its second crypto unicorn emerge along with the entry of more global VCs. In October 2021, CoinSwitch Kuber announced its $260 million Series C round of funding from Andreessen Horowitz (a16z), Coinbase Ventures, and existing investors Paradigm, Ribbit Capital, Sequoia Capital India, and Tiger Global.
In 2021, NFTs became one of the hottest tech trends (and buzzwords) of the year. Last November, Collins Dictionary named NFT its “Word of the Year”. We also saw the advent of the NFT craze in India with Salman Khan, Amitabh Bachchan, Sunny Leone, Rohit Sharma, Yuvraj Singh, Manish Malhotra and other celebrities zooming in to encash their brand value via NFTs. Overall in 2021, the NFT market had its “best year yet” with over $23 billion in trading volume, a report by analytics platform DappRadar found. In 2022, we will see more players emerging in the battle of user acquisition. The year will also witness initiatives to drive mass adoption of crypto assets and decentralised finance. Exciting times ahead!