Elon Musk, whose tweets have fuelled a ludicrous surge in the price of “joke” cryptocurrency Dogecoin, hosted Saturday Night Live this weekend. Most expected the value of
Also in this letter:
crypto ban“not smart”
VC Fundsin a bind
- Clubhouse makes Android debut
Dogefather rises, Doge tumbles
The market value of Dogecoin crossed $93 billion over the weekend, making it the world’s fourth-largest cryptocurrency. Then Elon “Dogefather” Musk made his much-anticipated appearance on American TV show Saturday Night Live and Dogecoin… crashed.
What happened? During a segment of the comedy sketch show, one of the actors reeled off several facts about the cryptocurrency in the character of a financial expert, before asking Musk if Dogecoin was a “hustle” (scam). He responded, “Yea, it’s a hustle”.
That joke was enough to cause Dogecoin’s market value to plummet by $20 billion within 90 minutes. It has continued to drop ever since, and has now lost about $30 billion since the weekend high.
It’s all very ironic, considering Dogecoin’s incredible rise in 2021 has largely been fuelled by Elon Musk tweets such as this:
Crypto exchanges win big: Musk’s TV appearance was good news for Coinswitch Kuber, which saw around Rs 600 crore in Dogecoin traded among 4,44,672 users in 24 hours, and WazirX, which handled 132.09 million Dogecoins on Saturday.
A very odd coin: Dogecoin is a cryptocurrency that was created in 2013 as a joke. And while most other
However, according to Blockchair.com, 27% of all Dogecoins are owned by one person and 65% of them — currently about 129 billion according to coinmarketcap.com — are in just 98 wallets. This concentration makes the token unusually susceptible to market manipulation.
Banks banning crypto ‘just not a smart thing to do’
In India, meanwhile, cryptocurrencies face a new threat as major banks are starting to deny payment services to crypto exchanges.
We reported last week that ICICI Bank, India’s largest private lender, is distancing itself from Bitcoin and other cryptocurrencies amid conflicting signals from Supreme Court and the Reserve Bank of India (RBI). On Thursday, the bank told some payment gateway operators to shut off ICICI netbanking for merchants involved in trading cryptocurrencies directly or indirectly.
What “conflicting signals?” Authorities in India have never been friendly to the idea of cryptocurrencies but the industry faced its first existential threat in 2018, when the RBI banned all domestic financial institutions from providing banking services to crypto exchanges.
- But the Supreme Court overturned this decision in March 2020, when it ruled in favour of crypto exchanges and startups.
- Despite this, banks have been citing the 2018 RBI circular for the latest round of bans, Nischal Shetty, chief executive of cryptocurrency exchange Wazirx, told us.
“Not smart”: Changpeng Zhao, founder and CEO at bitcoin exchange Binance, told ET, “[Banks refusing services to crypto exchanges] is just not a smart thing to do. It may come from fear or lack of understanding of cryptocurrencies. Some countries are pushing for innovation in the industry and others are resisting. The guys who are resisting it may protect some of their legacy institutions for a short time, but they’ll get destroyed in the long term.”
On May 7, Zhao had tweeted: “Banks refusing to work with crypto are like bookstores refusing to work with the internet.”
Read the full interview here.
Crypto punters vent online: The fallout of the banks’ decision is already visible. Since Saturday, many crypto investors have been unable to make trades on India’s largest cryptocurrency exchange WazirX as they have been unable to transfer funds to it.
- Annoyed punters have taken to social media and reached out to WazirX, which said that there was a delay in accepting funds owing to a “network issue at our banking partner’s end.” It promised that the money that was debited from traders’ accounts would be credited back ASAP.
Tweet of the day
PE, VC Funds in a bind over Sebi’s regulations
Several private equity, venture capital and hedge funds may have to realign some of their investments as Sebi has put a limit on the money a fund can invest in a company or another investment vehicle.
- Sebi’s new rules mainly affect PE and VC funds, which are registered under the Alternative Investment Funds 1 & 2 categories, and hedge funds, registered under the AIF category 3 in India.
Changes: According to the regulations, which came into effect on May 5, “Category I and II of alternative investment funds shall invest not more than 25% of the investable funds in an investee company directly or through investment in the units of other alternative investment funds.” AIF could earlier invest more than 25% of funds in one firm.
ETtech Done Deals
RuleZero, a tech platform that automates and manages equity ownership in venture-funded startups, has raised Rs 10 crore in funding from Zerodha’s Rainmatter Capital, IndusLaw, Reddy Futures and Kris Gopalakrishnan, according to its founders.
SastaSundar.com, a digital e-pharmacy startup, is in talks with existing Japanese investors Mitsubishi Corp and Rohto Pharmaceuticals, besides other global private equity players to raise around $100 million (Rs 740 crore) as part of series-D funding.
Clubhouse on Android soon
Live audio app Clubhouse will begin introducing a test version of its app to Google’s Android users in the United States on Sunday, the company said.
Why it matters: An Android app is crucial for the Andreessen Horowitz-backed startup to get a much-needed user boost as its downloads continue to tank. Clubhouse clocked only 922,000 downloads globally in April, a 66% dip from 2.7 million installs in March and 9.6 million in February according to Sensor Tower.
This also comes days after Twitter expanded the rollout of its social audio product Spaces, allowing any user on iOS or Android with 600 or more followers to start hosting a “Space” on its apps. The competition in the social audio segment is heating up, with several tech companies like Facebook, Spotify, LinkedIn, Slack, Telegram, and Discord among others have either launched or working on their own competing products, which are expected to roll it out in the coming months.
Clubhouse had recently launched a monetisation feature in partnership with Stripe that lets users send payments directly to other creators.
Coforge bets on banking, insurance
IT services firm Coforge said the fulcrum of its business will be banking and financial services, and insurance. This follows a drop in the contribution from the travel business on account of the pandemic over the past year.
- “The firm has in many ways been recreated as a financial services-focused technology company. This was already in play, but was also a consequence of the pandemic.. it has been accelerated by it,” said Sudhir Singh, CEO of Coforge, formerly NIIT Technologies.
By the numbers
- At the end of FY21, the share of the travel vertical had dropped to 19% from 28% a year ago on account of the pandemic.
- At the end of March 2021, BFSI together contributed 49% to the total revenue, which has now increased to 55%. Given the growth trajectory, Singh expects this to grow to about 60% in FY22.
Top Stories We Are Covering
Pandemic-hit eateries explore alternatives to Swiggy, Zomato: Hit hard by the pandemic and with lockdowns and curfews making delivery the mainstay for the second year running, more restaurants are looking to improve margins by trying out alternatives to aggregators Zomato and Swiggy, which dominate the segment.
How India’s SaaS sector is upending the legacy business model: India’s Software-as-a-Service sector has upended the legacy business model by remote marketing using digital tools. They are adopting a hybrid one of digital push and local presence in the race to garner more clients and scale up in their main markets.
Koo to double headcount: Homegrown microblogging platform Koo is planning to double its headcount in the next one year as it significantly scales up its user base on the platform, especially vernacular subscribers, its co-founder said.
Global Picks We Are Reading
■ Ransomware attackers up ante as White House vows crack down (Bloomberg)
■ ByteDance hires thousands to challenge e-commerce king Alibaba (Bloomberg)
■ Discord is rapidly expanding beyond gaming, attracting suitors like Sony and Microsoft (CNBC)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant and Karan Dhar in Mumbai