Industry executives said the global exchanges have seen the government teetering on crypto regulations in the past three years and that signals from the government have been confusing at best.
While the government has said it is looking at regulating rather than banning cryptocurrencies and has announced taxation provisions in the Budget, senior government officials have said that all options are on the table.
Moreover, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, has not been included in the 2022 budget session of Parliament.
As a result, global exchanges have preferred to remain on the sidelines.
The spokesperson of KuCoin, one of the world’s largest exchanges, said, “If the crypto legislation comes through in India, KuCoin will increase investment in the Indian market to consolidate KuCoin’s brand position and to better serve local traders, and as for setting up an operational centre in India, it will be considered as per the request of the crypto bill.”
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Charles Tan, head of marketing at Coinstore, said, “We’ll still be waiting for the final regulations before taking bigger steps. We intend to hire an additional 100 professionals for our India operations by the end of 2022. We’ll continue our plan to expand our operations in India.”
US-based crypto firm Coinbase has also been looking at setting up an Indian operation for quite some time given that India is among the top three markets outside of the company’s home turf, but it is waiting to see the final form of the crypto bill, said people aware of the exchange’s plan.
The exchange, which has Indian-origin executives such as Surojit Chatterjee (chief product officer), Manish Gupta (executive vice president, engineering) in its top management, has been hiring from India.
Responding to ET’s queries, the Coinbase spokesperson said the exchange does not have anything to share at this time.
Insiders said that Luno, a UK-based company, is also interested in entering the Indian crypto market.
Vijay Ayyar, Luno’s vice president, corporate development and international expansion, said in response to ET’s queries, “While Luno is always looking to expand internationally to many markets, India is definitely still interesting for us, given the immense potential for growth and the positive steps being taken by the government toward regulating the space. We don’t have anything to announce at this point, but it is definitely on our radar.”
A bunch of venture capital funds and global exchanges have also reached out to Indian exchanges to understand the nuances of the tax proposals, get updates on progress on the crypto bill and also explore possible partnerships.
“We have been having conversations with global exchanges and investors. They realise it won’t be easy to operate in the Indian market given the regulatory conundrum and the vagaries of the Indian market,” said Gaurav Dahake, CEO, BitBns, an Indian exchange. “Though strong global players will come in, I believe Indian crypto startups will be the players to beat in the Indian market.”
The ambiguity surrounding taxation and the lack of clear regulations are also stifling mergers and acquisitions activity in the sector.
“Global crypto exchanges have been cautious about entering India. I believe the top three-four global exchanges will come in and could look at acquiring Indian exchanges,” said Darshan Bathija, CEO, Vauld, a Singapore-based digital asset platform.
Top global exchanges such as Kraken, Huobi and FTX did not respond to ET’s queries.
The spokesperson from Binance, the world’s largest crypto exchange, said, “We are actively monitoring the changing policies, rules and laws in this new space globally, including India. We will let you know of any updates.”
After announcements of taxation provisions, global exchanges are also in the process of understanding the fine print and applicability of the tax proposals from an operational standpoint.
