How this 36-year-old coder built India’s largest crypto trading exchange
Nischal Shetty has made a name for himself in India.
In the first half of 2021 alone, his crypto business has grown more than 12 times to become the country's largest digital currency exchange. And now, he's set his sights on making WazirX India's first billion-dollar crypto unicorn.
But while Shetty is a tech entrepreneur through and through, the millennial's foray into cryptocurrency was initially inspired by a rebellion against big tech.
"There's always a reason why someone gets into crypto," Shetty told CNBC Make It.
Starting out in social media
Shetty is the 36-year-old co-founder and CEO of WazirX, a cryptocurrency platform that allows users to buy, sell and trade popular virtual coins such as bitcoin, ethereum, litecoin and Ripple's XRP.
Started in 2018 alongside co-founders Sameer Mhatre and Siddharth Menon, the company has capitalized on the rising tide of retail traders investing in cryptocurrencies.
Less than two years after launching, it was acquired by Binance, the world's largest crypto exchange. Then in April, its WRX crypto token temporarily reached a billion-dollar valuation.
Yet the trio's journey first started with a social media business.
"My first start-up was all about social media management. If you had your Twitter account, your Instagram account, you could manage it from a single place," said Shetty, who started his first business in 2010, shortly after completing his computer science degree.
The idea, later named Crowdfire, took off. But before long, social media giants became more restrictive with their APIs — or application programming interfaces — making it harder for third-party developers to build related businesses. Shetty and his co-founders decided it was time to change tact.
"We had to cut down quite a few features that were creating revenues for us but that was not seen as the right features by these networks," said Shetty.
"This is what led me to the whole decentralized ecosystem," he continued, referring to blockchain — a distributed database that is not controlled by any single party or company.
Jumping into crypto
Their timing coincided with a boon in cryptocurrencies, and in particular bitcoin. And in 2018, Shetty and his co-founders decided to use their tech expertise to create a blockchain-based platform for crypto trading.
"I realized there was a large gap in the way international exchanges operated versus the way Indian exchanges operated," he continued. "With that, we decided we should build an exchange focused on the Indian ecosystem."
However, weeks after launching, the Reserve Bank of India introduced a ban on crypto-related payments. WazirX had to quickly pivot, acting as a third-party custodian between buyers and sellers.
The shift paid off and the following year, in November 2019, WazirX was acquired by Binance, the world's largest cryptocurrency exchange, as it made its first foray into the Indian market.
Riding a meteoric rise
Today, WazirX claims its registered users have quadrupled in the second quarter of 2021 to hit 6.5 million while trading volume in June reached $6.2 billion.
"We've signed up more users in the last four, five months than we have in the last three years. That's been how rapid the growth has been," said Shetty.
Cryptocurrencies have recorded a meteoric rise in 2021, hitting a total market capitalization of over $2.5 trillion in May. It has since fallen to about $1.5 trillion, according to CoinMarketCap. Much of this year's uptick has been driven by increased demand from retail and institutional investors.
"There is a novelty and a fad associated with it, and that is quite tempting for investors," said Ganesh Vasudevan, a research director at IDC Financial Insights. "Then there is a convenience involved in it. The exchange platforms which have come out with the applications seem to be extremely convenient and super-efficient."
Facing pressure from authorities
Nevertheless, the crypto industry has been facing increasing pressure internationally as authorities weigh concerns that it could be aiding tax evasion and criminal activity.
In June, WazirX owner Binance was banned from undertaking any regulated activity in the U.K. It was the latest sign of a growing crackdown on the global cryptocurrency market.
WazirX, for its part, has been caught in the midst of a continuing crypto debate among Indian authorities, leading Shetty to team up with other exchanges to jointly engage the country's top financial decision-makers.
"They're indecisive how to treat this asset — whether it is a currency or a commodity or any other asset category," said IDC's Vasudevan.
All that as the environmental impact of cryptocurrency mining comes under renewed scrutiny. It is estimated that the mining of bitcoin alone consumes more than 60 terawatt-hours of electricity per year, more than the annual consumption of electricity in countries such as Switzerland and Singapore.
An opportunity for India's techies
Still, Shetty says there's plenty of scope for the industry to empower people in countries like his own.
In June, WazirX became South Asia's first marketplace for non-fungible tokens (NFTs) in a bid to help creators across India trade digital assets such as artwork and music. NFTs are digital assets that are tracked on blockchain networks which provide proof that someone owns a unique virtual item.
"If you look at the history of India, one of the largest reasons for our rapid economic progress has been software. Now, if you look at crypto, crypto is an extension of that whole software ecosystem, so India completely understands that we cannot miss this opportunity," he said.
With all that at play, the future path for WazirX — and cryptocurrencies more broadly — is set to be bumpy. But after the ups and downs Shetty has weathered over recent years, he said he's ready for an exciting ride.
"Our mission has been to make crypto accessible to everyone in India, and I think we are still very early in that," he said. "I believe India has the potential to get 100 million people into crypto and our journey has just started."
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