The unfriendly regulatory atmosphere in India has not stopped global crypto exchanges from seeking entry points in the vast potential market that India offers.
According to the recent talks between four anonymous industry sources and Reuters, three of the major crypto exchanges are exploring ways to tap the tech-savvy young population of India interested in trading digital currency. This comes at a time when the Indian government is coming strongly against the potential misuse of crypto in the destabilization of the country’s financial market.
US-based Kraken, Seychelles-based KuCoin and British Virgin Islands-based Bitfinex are following the example of Binance, one of the largest crypto exchanges, which entered the crypto market of India by acquiring the startup WazirX in 2019. While one of the exchanges is already preparing for an acquisition, the other two are still to decide whether to set up a subsidiary or, like Binance, invest in an Indian firm. When it comes to market reputation and performance, all the three exchanges make it to the Top 10 List of CoinMarketCap, as they have proved themselves ahead of others in terms of the traffic they generate, the liquidity they provide and the trust they have among investors.
India, which has almost 15 million crypto investors with over $1.37 billion in holdings, as per cryptocurrency analysts, offers huge potential. According to Kumar Gaurav, the founder of Digital bank Cashaa, Indian customers would have had a long list to choose from had the regulations and policies been crypto-friendly.
But that is far from the truth as the Indian government and RBI do not favour the use of these digital currencies fearing the concealment of illegal wealth by the rich and the speculative flow of digital assets which stays hidden from the eyes of the country’s stringent Exchange Controls. However, due to the absence of set procedures concerning the setting up of these cryptocurrency exchanges in the country, certain entryways give easy access. For example, these exchanges can register themselves as tech companies to bypass the government’s critical eye.
In the past few months, all over the world, the crypto environment is turning bleak as more and more countries are setting up additional regulations. China recently prohibited banks as well as online payment entities from enabling cryptocurrency-based services. Just hours ago, the US Internal Revenue Service (IRS) asked its lawmakers to design tighter and stricter reporting rules for cryptocurrency transactions. The Indian government has time and again made its stand clear, more recently with its anti-private cryptocurrency bill, Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Though the government has kept the bill on hold and continues discussions on the same, these mixed signals are not discouraging the millennials from getting excited about Bitcoin and similar digital currencies. An estimated $55 million worth of trading happens on WazirX every day. Amongst its total customer base, almost 15 million comprises heavy traders. It seems what gold is to the old generation, cryptocurrency is to the new one.
However, despite all the doubts and reservations, large global crypto entities find the chance to enter the Indian market more lucrative as they perceive the rewards greater compared to the risks.