The world’s biggest cryptocurrency exchange is just over six years’ old and operates a global trading platform of more than 100 cryptocurrencies, yet in those six short years, Binance has grown to a market capitalization of $1.3 Billion and is already worth significantly more than half the current value of Virgin Money which has been around twice as long. You can almost feel the tectonic plates of international finance shifting in the wake of such explosive growth: after the 2017 cryptocurrency ban in China (Binance’s home territory), the company rehomed in, then Taiwan a year later and now it operates out of the Channel Islands too: expanding its European reach by offering fiat to cryptocurrency pairs trading that includes Sterling and the Euro. Market-based restrictions in China and Japan have simply made Binance stronger and enhanced its international influence. And from last month that means India too…
On November 21 Binance announced that it had acquired the Mumbai headquartered Bitcoin exchange, WazirX in a transaction worth up to $10 Million, and don’t forget WazirX itself is only a little over a year old having stacked up some pretty remarkable returns in the difficult aftermath of the Reserve Bank’s financial support sanctions last year. It makes you wonder just what it’s capable of doing once these restrictions are removed (as they inevitably will be) and it’s a safe bet future expansion in a newly liberalised Indian market won’t have been far from the minds of those on the Binance board.
So what does all this tell us about the future of cryptocurrencies on the subcontinent? Well, quite a lot actually…because over recent years cryptocurrency exchanges have been shutting up shop in the teeth of continuing uncertainties over legal and regulatory compliance thresholds: the WazirX acquisition marks a significant reversal of this trend, the first major international acquisition to be completed in the sector and a clear recognition that India is now one of the leading players internationally, if not the leading player in cryptocurrency trading. Binance is in a unique position to know and it has just put $10 Million where its mouth is…
In terms of the way forward, the plan is to fully integrate WazirX’s peer to peer trading platform with Binance’s Fiat Gateway platform by the end of the first quarter of 2020, which will allow participants greater opportunities to trade digital assets using core Blockchain-based technologies.
And the wider geopolitical reasons for Binance choosing India should also be obvious to any informed observer: the subcontinent has the fastest growing population on the planet, forecast by the United Nations to be bigger than China by 2024, and it has a strikingly youthful demographic too with the Office of Statistics in India predicting more than 34% of the population will be under 24 years of age by 2020. In the prescient and plain incontrovertible words of Binance’s CEO, Changpeng Zhao: “This gives India an edge to adapt to and build on new financial technologies and I believe it will become a global Blockchain innovation centre capable of cryptocurrency innovation throughout the world”.
So take note of where you were in November 2019…this will be a transaction to remember.
North Block Capital Fund is structured to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.
Investing a sum as large as $10 Million to acquire a company that started operations only a little over a year ago is a big call on any basis, and especially so for a cryptocurrency company currently operating in a sector that has all but banned cryptocurrency trading and denied financial and banking support for its exchanges. But that last point is the critical one in my opinion.
A leading player like Binance is in a unique position to judge future trends in the market, not least because it has certainly made all the right calls so far. So its decision to invest so heavily and so publicly in India at this moment tells us something important about the future of these Government based restrictions and inhibitions…they’re short term and they won’t last.
My guess is they’ll be gone soon, leaving India to take its place as the world’s leading Blockchain and cryptocurrency market.
Watch this space!