What lies in store for crypto entrepreneurs in India given the country’s stringent regulations?

The life of an Indian crypto entrepreneur has been nothing short of a roller coaster ride over the years. With changing regulations and market conditions, entrepreneurs in this space have had to face many pains and myriad challenges, fighting through adversity to ensure their startup can make the most of market opportunities in a volatile and unregulated market.

Since 2019 and up until the end of last year, increasing interest and acceptance of crypto in the country led to a great time for Indian crypto startups, especially exchanges. It was at this point that most crypto exchanges saw their revenue and profitability surge, and India witnessed its first crypto unicorns.

Fast forward to today, Indian crypto entrepreneurs are in a bit of a bind again. The crash in crypto prices and the events that have ensued have shaken investor confidence. This has also led to a drastic drop in the trading volume of Indian crypto exchanges.

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Entrepreneurs and stakeholders understand that downcycles are part of the market and will not change the long-term potential of Bitcoin and crypto.

What I find most frustrating for entrepreneurs is the lack of clarity regarding the country’s official stance on crypto. Crypto is still in a state of regulatory limbo in the country, and the newly introduced tax regime appears to discourage investment in crypto, as the 30% rate is the same as that imposed on gambling.

At the same time, while crypto adoption is increasing globally and other jurisdictions have switched to crypto-friendly policies, there is a growing trend of entrepreneurs leaving India to shift their businesses to other crypto hotbeds such as Dubai and Singapore.

This is definitely a worrying sign for the future of crypto in India.

What lies ahead?

Right now, crypto lies under a cloud of negativity that is hampering mass adoption Industry innovation and growth.

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Changing this requires positive regulation that restores people’s confidence in the asset class. So far, the Indian government has taken it easy with a “wait and see” approach.

If we continue with this approach, we may miss the bus in developing cutting-edge technologies at home and turning India into a global crypto hub.

For now, the government can take a few pages from the regulatory approaches that other countries have taken. Working closely with crypto industry stakeholders, the government could enact regulations that keep entrepreneurs and innovations in the country.

Unfortunately, if for some reason the current regulations don’t evolve or we don’t see many positive opportunities, it would result in a huge brain drain and discourage innovation in crypto in the country.

The crypto market, which is still in its infancy, boasts a market cap of nearly $1 trillion. While there may be disagreement over the valuation, there is no doubt that crypto has the potential to positively impact the future and make a significant contribution to India’s GDP while creating a variety of employment opportunities for the youth. This is what India could potentially lose unless a more constructive approach to future technologies is adopted.

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At the same time, with positive regulations, a lot of institutional money would flow and quickly revitalize the market. In all likelihood, there is a lot of institutional and private money on the fence, and the right regulations would give them a boost to invest in India’s crypto ecosystem.

I am confident that we will find the right balance between regulations that both encourage innovation and help generate revenue for the government and enable India to become a global leader in crypto.



The views expressed above are the author’s own.



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