Why we're looking at crypto payments
Last year we said we’d focus on fintech. This year that took us somewhere most investors are avoiding: crypto payments.
We’re not making a bet on the price of bitcoin. We’re interested in the plumbing that lets a business get paid in crypto and receive rupees in its bank account. Here’s why.
What a crypto payment gateway does
A card payment gateway sits between a merchant and the card networks. It takes the payment, checks for fraud, and settles the money to the merchant’s bank. A crypto payment gateway does the same job for digital assets. A customer pays in a stablecoin like USDT, the gateway confirms the transaction on chain, converts it, and settles rupees to the merchant.
The customers aren’t speculators. They’re Indian businesses that sell abroad: software agencies, freelancers, exporters and online sellers whose overseas clients find it easier to pay in stablecoins than to send a wire. For them, a stablecoin is just a faster way to receive dollars.
Why most investors stay away
Crypto had a terrible 2022. Prices fell sharply, and FTX collapsed in November. In India, the 2022 Budget added a 30% tax on gains and a 1% TDS on transfers. Volumes on Indian exchanges dropped, and venture funds stopped writing cheques to anything with “crypto” in the pitch.
Banks became cautious too. Many Indian crypto companies struggled to keep a bank account open.
What changed in March
On 7 March the government brought virtual digital asset businesses under the Prevention of Money Laundering Act. Exchanges, custodians and anyone who converts crypto to rupees now has to register with the Financial Intelligence Unit, run KYC on customers, and report suspicious transactions.
Most of the industry read this as more bad news. We read it differently. Crypto payments in India now have a regulator, a rulebook and a registration requirement. That turns a grey area into regulated fintech. And regulated fintech is what we buy.
Why this fits what we do
The same pattern from last year applies. There are small companies doing useful work for real businesses. They can’t raise money, because the word “crypto” scares investors away. And the new rules raise the bar enough that the companies already following them will have an advantage over the ones that aren’t.
We want to own the companies that get registration, KYC and tax reporting right. When the market comes back, and banks and larger payment companies want to offer crypto settlement to their own merchants, those will be the ones they’ll want to buy or partner with.
We know the risks. The rules could change again, and the RBI remains sceptical of crypto. We’ll keep these companies small, compliant and boring, and we won’t hold crypto on their balance sheets.
Happy Diwali.