Ahmedaba-based crypto exchange ZebPay has launched the ZebPay Lending Platform, which allows the investors on its exchange to invest their crypto assets in fixed deposits.
The crypto-based fixed deposits can be open term or fixed term in nature, with investors able to open fixed deposits in Bitcoin, Ethereum, stablecoin Dai and Tether. While ZebPay claims to be the first exchange to have launched this feature, Singapore and Bengaluru-based Vauld (formerly known as Bank Of Hodlers) also has a similar feature along with crypto-based lending and borrowing.
With the ZebPay Lending Platform, investors and traders have to commit certain crypto assets for a fixed term or can keep it open term, if they wish to use the FD as a way to grow their crypto assets for daily trading and swapping. In an open term account, interest on the crypto asset is deposited to the ZebPay wallet on a daily basis. Users can choose to withdraw these deposits at any time without losing any of the returns they have incurred until the day of withdrawal.
On the other hand, under the fixed term deposit, users can lend their crypto assets for seven-day, 30-day, 60-day and 90-day periods. This functions much like a fixed deposit in a bank. The rate of return will vary depending on the tenure of the FD.
In these accounts, the returns earned, along with the principal amount, will be deposited into the investor’s ZebPay wallet at the end of the term. Investors can also choose to withdraw the pledged assets before the end of the tenure, however, they would have to forgo the interest.
ZebPay claimed that the fixed deposit model brings higher returns than a typical holding strategy on crypto assets, since the growth is guaranteed at a fixed rate, regardless of market fluctuations. Fixed deposits can be a way to gain from holding assets that are currently seeing a market rally or a bull run. Besides ZebPay and Vauld in India, globally, Binance, Coinbase and other exchanges also offer similar services.
The launch of crypto-based fixed deposits is expected to drive more activity in the crypto segment in the next few months as there’s already been a huge influx of new users at India’s crypto exchanges this year. According to Bitcoin marketplace Paxful, India’s weekly volume share of peer-to-peer crypto transactions worth close to 100 bitcoins on the platform eclipsed China’s 50 bitcoin for a brief period in March this year. Last year, India ranked second (after China) among the bitcoin-trading countries in Asia, both in terms of volume and value of the bitcoins traded.
However, the Indian government’s stand has not moved in line with crypto investors’ enthusiasm across the country. It has been dilly-dallying on a regulatory regime for crypto. Earlier this month, reports suggested that after multiple delays in implementing regulations for the crypto industry and fears of a complete ban on cryptocurrencies in India, the Indian government may form a panel of crypto and financial experts which would come up with the roadmap for regulations and use of blockchain in India.
One of the key focus areas would be to find solutions to regulate crypto as digital assets instead of currency, which is something most Indian startups have called for from the very beginning, given their primary business models around investments.