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In 2017, the price of bitcoin rose from $1,000 to almost $20,000. ZebPay, owned by Mahin Gupta, Saurabh Agarwal, Sandeep Goenka, was then India’s largest cryptocurrency exchange. However, when prices of the cryptocurrency crashed in early 2018 and the RBI came out with a ban on crypto-related payments, business came to a standstill. A shift to Australia and Malta, and crypto-to-crypto trading didn’t salvage the business. The owners sold out to Rahul Pagidipati, an Indian origin lawyer in the US. Pagidipati does not fit the standard profile of a crypto professional. He is not a coder, nor a software engineer. Instead, he has spent most of his working life managing his family office and investing in and running health insurance companies. Mint spoke to Pagidipati to understand his journey into the crypto space and where he is headed now. Edited excerpts of an interview:

Can you tell us a little bit about your background?

I was born and raised in the US, but my parents came from India. They are doctors and hence much of my professional life has been spent investing in businesses connected to healthcare. I am a lawyer and also have an MBA degree from Northwestern University. I first came to India to start a business in 1999, during the dot com boom. I launched an insurance claims processing company for US insurers called Anion Healthcare Services. I later sold this company but continued to invest in healthcare-related businesses for my family office - Ayon Capital. This is essentially my own family’s money and we do not raise money from outsiders. I read Satoshi Nakamoto’s whitepaper on bitcoin in 2011 and I was blown away. At the time the price of bitcoin had gone from $1 to $10 and then dropped back to $3. It got me thinking about how to use blockchain for health insurance and I got more interested in cryptocurrencies in general.

When did you acquire ZebPay?

In 2018, ZebPay had shifted base to Australia and Malta from India, after the RBI ban and reoriented itself towards crypto-to-crypto trading rather than rupee-crypto. I acquired a minority stake in the company in that year and gradually got more and more involved in its operations. The company was losing money at the time, around half-a-million US dollars a month. In late 2019 I decided to acquire full control and staked almost my entire net worth for this. My family thought I was crazy! It so happened that just two weeks after my purchase, Binance (an international exchange) announced the acquisition of WazirX, another Indian cryptocurrency exchange. Keeping the company intact was tough but I persuaded most of the middle management to stay on, despite the RBI ban. Three months after my acquisition, the Supreme Court of India quashed the RBI ban and ZebPay took off.

Is there a bubble in bitcoin?

Absolutely not. The market is reasonably efficient when it comes to cryptocurrencies also. I think there are two fundamental reasons why the price has to go up. First, a large section of bitcoin users typically are hodlers (they do not sell easily). This constricts the supply. Second, good money tends to displace less good money. Bitcoin and cryptocurrency in general are technologically better than fiat currencies like the dollar and rupee. They will naturally displace the latter. I’m personally bullish on ethereum though. For nearly two years, I used to buy one ether per day and I will resume this soon. I have most of my crypto net worth in ether actually. Bitcoin is a store of value but ethereum opens up so many possibilities through smart contracts.

What do you charge users of ZebPay?

For a transaction on the exchange platform, we charge an average 0.2%. If you want to move money out of the exchange into a cold wallet, of course transaction fees will apply. This charge is the same for all cryptocurrencies traded on ZebPay. We have a monthly membership fee of 0.0001 bitcoin which is waived as long as you do one trade that month.

How should India regulate cryptocurrency?

There are broadly three types of cryptocurrencies. First, utility tokens like ethereum and BAT should be regulated as digital assets. Kind of like domain names. This should be done by some type of commodities regulator. Second, security tokens (those that represent another asset like a stock or gold) should be regulated as securities by a markets regulator (think SEBI). Finally stable coins (such as cryptos pegged to the dollar) should be regulated by the central bank (think RBI). The central bank should require issuers of stable coins to maintain equivalent fiat currency in reserve. There should of course be regulation, especially for consumer grievances.

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