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Indian households are known for their affinity for gold but 2020 brought in a notable shift in investment allocation. While Indians own more than 25,000 tons of gold, investments in cryptocurrencies soared from about $200 million to almost $40 billion in the past year despite a proposed trading ban and outright hostility toward the asset class, Bloomberg reports.

This begs the question if Bitcoin (BTC/USD) and other cryptocurrencies are indeed becoming the new digital gold?

India’s gold market is far bigger than the cryptocurrency market and is one that is rooted in their culture. However, a shift in sentiment is very much underway as the biggest crypto exchanges in the country showed an increase in daily trading activity from $10.6 million last year to $102 million now.

Young entrepreneur Richi Sood represents a growing trend. She has invested the equivalent of $13,400 in rupees in cryptos over the past year. She is joined by more than 15 million other Indians who buy and sell digital coins which put the country on pace to potentially rival the 23 million Americans who also invest in cryptos. Sood told Bloomberg:

I’d rather put my money in crypto than gold. Crypto is more transparent than gold or property and returns are more in a short period of time.

Cryptocurrency advocate and co-founder of ZebPay Sandeep Goenka also told Bloomberg young people find it easier to invest in cryptos because the “process is very simple.” Goenka added an Indian investor merely needs to go online and can own cryptos within seconds. By contrast, gold needs to be verified.

Legal uncertainty is one of the biggest challenges before wider adoption in India. Still, its people are willing to take this risk, as the increasing adoption shows. The sector is rife with incidences of regulatory shortfalls. 22-year-old investor Keneth Alvares says:

I think over time everyone is going to adopt it in every country. Right now, the whole thing is scary with regulation but it doesn’t worry me because I’m not planning to remove anything for now.

Meanwhile, the Indian government is not showing signs of fully embracing digital coins, despite recent moves in the right direction. The national bank has expressed concern about them. Six months ago, authorities proposed a ban on crypto trading, which was not passed. India isn’t the only country with this tendency. Binance was banned from doing any regulated business in the U.K. recently.

Understandably, bigger investors feel discouraged from discussing their holdings openly. Bloomberg talked to a banker who had bought more than $1 million in crypto, who said he was worried about retrospective tax raids given the lack of income tax rules at present.

The post Are cryptocurrencies the new gold in India? Investors bought $40B in cryptos last year appeared first on Invezz.

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