Industry executives said global exchanges have seen the government waver on crypto regulation over the past three years, and the signals from the government are confusing at best.
While the government said it was considering regulating rather than banning cryptocurrencies and announced tax provisions in the budget, senior government officials said all options were on the table.
Additionally, the Cryptocurrency and Official Digital Currency Regulation Bill, 2021 was not included in the 2022 budget session of Parliament.
As a result, global stock markets preferred to stay away.
The spokesperson for KuCoin, one of the largest exchanges in the world, said, “If crypto legislation is passed in India, KuCoin will increase investment in the Indian market to consolidate KuCoin’s brand position and better to serve local merchants, and as for setting up an operational center in India, it will be considered to be in line with the demand of the crypto bill.
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Charles Tan, Head of Marketing at Coinstore, said: “We will always wait for final regulations before taking any more significant action. We intend to hire 100 additional professionals for our operations in India by the end of 2022. We will continue our plan to expand our operations in India.
US crypto firm Coinbase has also been considering setting up an Indian operation for some time, given that India is among the top three markets outside the company’s home territory, but it is waiting to see the final shape. of the crypto bill, people familiar with the exchange’s plan said.
The exchange, which has in its management executives of Indian origin such as Surojit Chatterjee (head of product), Manish Gupta (executive vice president, engineering), recruits from India.
Responding to questions from ET, the Coinbase spokesperson said the exchange had nothing to share at this time.
Insiders said that Luno, a UK-based company, is also keen to enter the Indian crypto market.
Vijay Ayyar, Luno’s Vice President of Corporate Development and International Expansion, said in response to ET’s questions, “While Luno is still looking to expand internationally in many markets, the India definitely remains attractive to us, given the immense potential for growth and the positive measures taken by the government to regulate the space. We have nothing to announce at this point, but it’s definitely on our radar.
A group of venture capital funds and global exchanges have also reached out to Indian stock exchanges to understand the nuances of the tax proposals, get updates on the progress of the crypto bill and also explore possible partnerships.
“We have had conversations with global exchanges and investors. They realize that it will not be easy to operate in the Indian market given the regulatory conundrum and the vagaries of the Indian market,” said Gaurav Dahake, CEO of BitBns, an Indian exchange. “Although strong global players will come, I think Indian crypto startups will be the players to beat in the Indian market.”
Ambiguity surrounding taxation and the lack of clear regulation also stifle M&A activity in the sector.
“Global crypto exchanges have been cautious about entering India. I think the top three or four global exchanges will come in and may consider acquiring Indian exchanges,” said Darshan Bathija, CEO of Vauld, a Singapore-based digital asset platform.
Major global exchanges such as Kraken, Huobi and FTX did not respond to ET’s questions.
The spokesperson for Binance, the world’s largest crypto exchange, said: “We are actively monitoring the development of policies, rules and laws in this new space globally, including in India. We will notify you of any updates.
After the tax provision announcements, global exchanges are also figuring out the fine print and applicability of the tax proposals from an operational perspective.