Tim Draper Keen To Invest In Indian Cryptocurrency Startups

Having criticised the Indian government in the past for mulling to ban cryptocurrencies, billionaire Tim Draper, venture capitalist and founding partner of Draper Fisher Jurvetson (DFJ), Draper Associates, and the founder of Draper Venture Network and Draper University is now hopeful after the Supreme Court’s Judgement that the best ideas will ultimately prevail in the crypto market in India.

While the writ petitions of Siddharth Dalmia, Vijay Pal Dalmia and Rohan Dwaipayan Bhowmick demanding crypto regulations across the country are still pending and listed before the Supreme Court for hearing on April 27, 2020, the IAMAI vs RBI case judgement arrived earlier this month and has reset the crypto discourse in the country.

During an interaction with Inc42, Draper, a third-generation venture capitalist said,

The Supreme Court of India and the Indian government have shown that the best ideas ultimately prevail, and just in time, because the benefits of Bitcoin and crypto over current systems will become apparent during this crisis.

Eight months back, after the Indian government-appointed Inter-Ministerial Committee led by former DEA secretary Subhash Chandra Garg recommended a complete ban through draft ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019’, Draper had then commented that It is akin to the Luddites. They are in fact saying, ‘we will not tolerate progress.’ It will set them back 40 years. Imagine if they did this with the internet?

Draper Backs India’s Crypto Startups

The latest judgement has brought winds of change in the crypto industry. While Zebpay has already made a comeback to India market under a different company name and new leadership, global exchanges such as Binance and OKEx have entered the Indian market as well. Recently, Binance announced the acquisition of Indian exchange WazirX, OKEx entered into a partnership with another Indian exchange CoinDCX.

After the judgement, Draper recently had made a trip to India and interacted with some of the key Indian crypto ecosystem stakeholders. On his plans pertaining to the Indian market, the VC said,

Absolutely! I met several Bitcoin and crypto startups while I was in India last week. I hope to be able to fund a number of them.

Due to the repeated warning over crypto trading in India from Indian government, RBI, banks and other authorities, most leading investors had shied away from investing in Indian crypto startups.

Very few startups have gained the trust of VCs, such as Unocoin from Blume Ventures, Ah! Ventures, Mumbai Angels and others, CoinDCX from Bain Capital, Sanjay Gupta, Utsav Somani and others, Koinex from Pantera Capital, Beenext etc, Zebpay and the now-defunct Coinsecure have been able to successfully raise the funding.

Post the judgement, Binance has already announced setting up a $50 Mn fund to invest in a crypto and blockchain startups and with Draper now keen to invest in, the Indian crypto ecosystem is bound to deepen and expand in India and abroad.

The Bitcoin Volatility

Bitcoin and most of the cryptocurrencies have been time and again criticised for their volatility. The extent of volatility could also be understood by the fact that Bitcoin was trading at around $8K on March 11 and had hit as low as $4.1K on March 12, witnessing a free fall of over 48% within 24 hours, and is currently priced at $6.1K, according to data produced by Coinmarketcap.

What exactly caused such a dip? Draper clarified that institutional panic triggered the fall, so at first crypto paralleled the stock market. Some of the miners were very leveraged and had their loans called so they were forced to sell. After that, some of the hodlers (long-term investors) looked at it as a buying opportunity.

“Long term, I think this crisis will allow people to recognize that bitcoin is simply a better way to hold value and spend money than through our current banking system.”

On Facebook’s Libra, Celo And New Innovations In Crypto

While Bitcoin ETF is yet to be launched, Bitcoin futures has been quite a hit in the market. “I think companies like Opennode and Lightning Network will make it a lot easier to spend bitcoin, and new companies will take advantage of the blockchain and smart contracts to create a more frictionless and honest system of commerce. Taxes can be simpler too as just a fraction of a percentage in a transaction tax.”

Facebook’s Libra and Celo have been quite a buzz in the crypto world in the recent years, while Facebook is planning to revamp Libra project after facing the wrath of authorities across the world and many big companies withdrawing their support from the project, Celo has become the new sensation with as many as 50 companies/organisations backing the project.

What’s Draper’s take on these projects?

“I like all things crypto. It is just better than the banks,” he said.