The Elon Musk effect, on teenagers

They are slick, smart, and savvy. And they are eager to invest in cryptocurrency — hanging on every word of the “Technoking of Tesla, Imperator of Mars”.

Hi, it’s Apoorva. Last week, I reported how investing in crypto has gone beyond millennials to those pushing 45 and, at times, those over 65 years of age. From using YouTube videos of “What is Bitcoin” by comedianturned-youtuber Tanmay Bhat to showcasing returns on their portfolio, 20-year-olds are deploying all the tricks in their toolbox to convince their “moms, mausis and mamas” to invest in crypto.

Almost a dozen 20-nothings I spoke with end up becoming crypto advisers to their older relatives. This, in turn, gives them the freedom to play with bitcoin and the ilk.

And then there are the teenagers.

Now, they can’t legally invest in cryptocurrency themselves. Indian crypto exchanges require users to be at least 18 years of age to trade. Most follow a self-regulated code of conduct that requires a new user to
furnish PAN/Aadhaar details and a selfie with the Aadhaar card to register for crypto trading.
That’s no deterrent for a teenager.

Several 16-year-olds I spoke with are using their parents’ IDs—with their approval—to start crypto trading. Most had a similar initiation into the crypto universe: they saw celebrities or billionaires tweet about it. Here are their stories.

Only the first name is used to protect the identity of minors.

‘Investing in BTC and ETH is investing in the future’

“I came to know about Bitcoin when I joined Twitter in August last year,” said Srushti (16), a self-confessed startup enthusiast who writes tech-related threads on the microblogging platform.

After a little digging about the blockchain and crypto, she was sold on the concept.

“It is a total scam”, her father had said in response to Srushti’s request for his PAN and Aadhaar card details. He was wary of the unregulated nature of the industry.

“If everybody’s believing in crypto and they’re investing in crypto, to me it means that you’re forcing the
government to adopt it. Crypto will be in our future,” she explained to me. “The big people who make the
change (Elon Musk), believe in it and are adopting it. This means it will be our future. And it will be good,
right? Because there will be transparency in government, and all the transactions will happen openly
because of the decentralised nature of the technology.”

“There will be no corruption.”

It wasn’t until Diwali last year that her father finally agreed. Srushti used her parents’ details and opened an account on WazirX.

“If I go into loss, it is my responsibility,” Srushti assured them and pledged her entire savings of Rs 1,500 in Dogecoin when Elon Musk said it will go to the moon. She used her profits from Doge to invest in Matic, Ethereum (ETH) and Bitcoin (BTC) and others.

Srushti follows a simple strategy when it comes to crypto investing. “I keep an eye on people who are
related to crypto. It gives you an idea of what is happening in the industry and how people will react to it. So, according to that, I just make a prediction and put money into it.”

“Investing in BTC and ETH is investing in the future. A meme coin can’t be our future. I invested money in
Doge because I knew it would go up. I trust Elon.”

‘It took me two years to convince my parents’

Aryan, 16, had been trying for two years to convince his doctor parents, before they finally agreed to give
him their IDs to begin trading.

“A few months back I just told them there are a lot of people making good returns off it,” said Aryan, who is building medical AI alongside attending 11th grade.

“If you have a small amount of money you can put in as an experiment in which, even if it goes down, it
doesn’t matter. So, that’s how they got convinced.”

To be sure, Aryan is into cryptocurrency purely for the technology. He invested the few thousand rupees he
was given into bitcoin and ethereum.

Among the roadblocks, he said, are parents who find it hard to grasp the technology backing crypto. There’s
also this prevalent belief about crypto being used for illegal activities.

“People under 30 years of age get it more than people above 40 who think assets need to have some
backing behind them because the assets that they have built their wealth on—either real estate or stocks— have a tangible value,” he said.

‘I’m just a 16-year-old having fun’

Then there are others like Viraj who runs a startup at 16, and found it easy to convince his parents to give their KYC details. Viraj began crypto trading five days ago out of curiosity, and confessed he isn’t fully aware of the technology backing it or why people call it the future.

“I put in some of the money I earned through freelancing in bitcoin and ethereum,” Viraj said. “I am just a 16-year-old having fun and doing fun things on the internet. I am trying to experience the ride.”

The name of Musk did come up. Viraj refers to him “as a fellow builder”. I asked him about Musk’s fluctuating stance on cryptocurrency that sent bitcoin price into a tizzy. “I would say he does little mischiefs on Twitter. But it doesn’t change the fact that he is doing good things to change the planet.”

‘If I was 18, I’d have already done it’

Prajwal turns 17 next month and has been trying to convince his parents to let him invest in crypto, but to no avail.

He nearly had them, until the regulatory uncertainty re-emerged this month when big banks like ICICI Bank cut ties with crypto exchanges. “That was a big problem,” said Prajwal, whose parents use the bank. “Otherwise my dad would have been convinced.”

That’s not it. There are also suspicions of the extremely volatile nature of the digital token.

“Recently, when dogecoin actually slipped after the SNL event and bitcoin took a hit in the last 48 hours, that made them sceptical again,” he said. His parents showed him a series of news articles in return and said “if something is so volatile how can we invest in it”.

No child’s play, this

Three lawyers I spoke with said parents would be liable for all crypto trading done through accounts set up using their credentials.

If parents are letting minors deal with crypto with their approval the “transaction shall be deemed to be undertaken by the parent”, said Subodh Sadana, partner at XXXXXXXX.

According to him, the real problem arises when kids use the details without the knowledge of the parent. “In a situation where the minor acts using the details of the parent but without their consent or knowledge, then it could be an issue as contracts with minors are void ab initio (void with no legal effect).”

Additionally, if the cryptocurrency is used by a minor for any illegal or unlawful activity, both the parent and the minor could be liable. “In case the cryptocurrency is used for any illegal or unlawful activity, then there could be a possibility that both the child and the parent can be booked for undertaking such an activity,” Sadana said.

Gaurav Shanker, managing partner at Business Law Chamber, said as much.

“Currently, there is no law regulating cryptocurrencies in India, however, considering the current Indian laws, it would not be wrong to assert that in case the minor commits any breach of the terms of the crypto exchanges, it might land the parents in trouble since the account was being used under their knowledge with their KYC. Thus, parents would be liable for all the acts of the minor done through the account.” The last word: “We don’t allow any minor to open an account on WazirX,” said a company spokesperson. “We won’t be responsible if someone allows their children to use their KYC documents to open an account on WazirX.”

Over to my colleague and good friend Vikas SN to take you through the week’s most important stories. GROWING CONFUSION OVER E-COMMERCE DELIVERIES

E-commerce firms in India continue to struggle coping with various rule changes by state governments amid the pandemic.

In Karnataka, a policy flip-flop triggered confusion among online retailers and disrupted the delivery of items to customers in Bengaluru on Monday. This after the state government imposed a stricter
lockdown from May 10 amid a spike in Covid-19 cases.
The Maharashtra government said that drivers and helpers on all goods carriers entering the state
must carry a negative RT-PCR certificate from less than 48 hours ago. Also, a cargo vehicle cannot
have more than two people, including the driver.
While Assam has allowed the delivery of essential goods through e-commerce, it has introduced an
odd-even formula for private vehicles. Those with even registration numbers can travel on even dates and odd numbers on odd dates from 5 am to 2 pm. On Friday, the government allowed these firms to function during its lockdown hours between 2pm and 5am, giving some respite to e-commerce
companies.

That said, e-commerce companies are allowing Indian consumers to order products ranging from electronics to books and clothing to make-up kits amid lack of clarity on delivery of non-essential goods across various states. Only Tamil Nadu has stated that delivery of food, provisions, vegetables, meat and fish by ecommerce firms is allowed from 6 am to noon while other states including Maharashtra, Karnataka, Tamil Nadu, Delhi and Haryana have not specified essential items.

This is crucial for online retail companies since products such as smartphones, fashion, electronics, large appliances and furniture, all of which fall under the non-essential category, drive the bulk of their sales.

DEALS IN THE WORKS

Flipkart is in preliminary talks with a clutch of new investors to raise at least $1 billion, even as it weighs an initial public offering (IPO) in the US in the fourth quarter of 2021. The fundraising is largely for the company’s expansion plans and could go up to $2 billion, depending on investor appetite.
SoftBank Group has transferred its around 40% shareholding in mobile ad services platform InMobi—its oldest investment in India—to Softbank Vision Fund 2, ahead of a potential public market debut. InMobi has kickstarted its US listing process by appointing three investment banks—including JPMorgan and Goldman Sachs—as advisers to help raise $500 million to $1 billion.
The Tata Group has increased the authorised share capital of Tata Digital to Rs 11,000 crore from Rs 1,000 crore, indicating the level of financing that India’s largest conglomerate may infuse into its ecommerce business. Parent company Tata Sons Pvt. Ltd. had infused Rs 400 crore into the company last month and Rs 600 crore before that in multiple tranches.
Belgian investment fund Sofina is at an advanced stage of discussions to lead a new funding round in personal care brand Mamaearth that could value the company at about $700 million from around $200 million last year. The financing round is expected to be in the range of $60-$80 million, with a primary component of around $50 million.
Online auto classifieds platform CarTradehas kickstarted preparations for filing the draft prospectus for its initial public offering (IPO) to raise around Rs 2,000 crore, three people directly involved in the process told ET. As a precursor to this offering, the firm recently changed its status from a private company to a public one.
Digital payments platform Paytmis likely to get about 7% stake in Japan’s PayPay, two years after the Noida-based firm was given a call option to convert its holding into shares. Paytm is the technology partner for the QR code-based payments business PayPay, a joint venture of SoftBank and Yahoo Japan.
Swiss private equity fund Partners Groupis in talks to acquire India’s largest non-telco internet service provider Atria Convergence Technologies (ACT). Partners Group will likely buy out the 95% stake owned by private equity funds True North and TA Associates, which had invested $500 million in the company in 2015. These funds are eyeing a valuation of $1.4 billion to $1.6 billion.

Meanwhile, Ethereum co-founder Vitalik Buterin has donated cryptocurrency worth over $1 billion to Crypto Covid Relief Fund. The move has triggered confusion in India’s crypto and banking ecosystem, since the bulk of this donation is in a meme coin called Shiba Inu (SHIB)—a rival to Dogecoin with the same logo.

Here’s a quick look at the top funding deals this week.

The Elon Musk effect, on teenagers

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