The company had earlier announced its plans to offer conventional investment products like mutual funds, US stocks, etc., widening its scope beyond cryptocurrencies, which have taken a battering over the last few years. Even though the price of bitcoin has recovered in the last six months, it is still half the highs it hit in November 2021.
“The company is planning to apply for a stockbroker’s licence with SEBI (Securities and Exchange Board of India). There are also conversations going on with non-banking financial companies (NBFCs) and banks for offering fixed deposits,” a person aware of the matter said.
For Coinswitch, the focus turned to Indian stocks after its plans to enable retail investment in US stocks were put on the backburner following the hike in tax collected at source (TCS) on foreign remittances under the Liberalised Remittance Scheme (LRS).
“The extended downturn in cryptocurrencies has filtered out non-serious investors. Serious investors typically park their money in a variety of instruments. The thinking is that since the crypto investor is looking at other options, why not offer those on Coinswitch,” the person added.
Confirming the development to ET, Coinswitch co-founder and CEO Ashish Singhal said in response to a set of queries, “Our ambition is to become a full-fledged wealth-tech platform. To that end, we have several products in our pipeline. As for applying to SEBI for a stockbroker’s license, we will share details when we announce our new products.
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“Our crypto foray has provided us with a strong foundation to expand into other asset classes. More than 19 million Indians have invested in crypto using our platform. We aim to grow alongside them by offering a diverse range of asset classes like fixed deposits, mutual funds, and more. We are aiming to announce these products by the end of this financial year’’.ET had reported in November that in the backdrop of regulatory ambivalence and subdued demand sentiment for cryptocurrencies, exchanges and trading platforms were looking at diversifying their offerings to non-crypto products or were developing other adjacencies in the Web 3 space.
Coinswitch will wade into a highly crowded space that is led by bootstrapped firm Zerodha, and other new-age investment platforms, in addition to conventional stock brokerages like ICICI Securities, HDFC Securities, Sharekhan, etc.
ET had reported in April that startups operating in the online stock broking segment were witnessing a slump after growing exponentially through the pandemic era.
For example, Tiger Global-backed Upstox, which had climbed to the second position among discount brokers in terms of active users, has perhaps seen the steepest fall among the large players. It had around 2.8 million active users at the end of March this year, having lost around 2.6 million since June 2022.
Stock exchanges define an active user as one who has punched in at least one trade in the past year. The numbers are net of new customer additions.
Listed discount broker 5Paisa lost a million active customers in this lean market. According to data presented by the company in its third quarter results, new client adds fell 60% to around 1,60,000 in October-December 2022, from 4,00,000 a year earlier. Zerodha lost around 2,00,000 active users between June 2022 and March 2023.
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