The once flourishing Indian crypto market is experiencing quite tough times, evident with the declining market and crypto agencies fleeing to foreign countries.
In the second week of January, the Government of India blocked access to nine virtual digital asset services along with web platforms for foreign cryptocurrency exchanges, including Binance, Kucoin, and OKX.
Also, the Ministry of Electronics and Information Technology (MeitY) had asked Apple to remove offshore crypto apps from its store.
To decode the whole scenario, you must take note of the factors contributing to this downturn:
| Name of the Offshore VDA Service Provider | Name and Address Details |
| Binance | Binance Investments Co., Ltd – House of Francis, Room 303, IIe Du Port, Mahe, SeychellesBinance Holdings Limited – C/o International Corporation Services Ltd Harbour Place, 2nd Floor North Wing George Town, Grand Cayman Cayman IslandsBinance (Switzerland) AG, Gubelstrasse 11, 6300 Zug. |
| Kucoin | Mek Global Limited, c/o Vistra (Seychelles) Limited- Vistra Corporate Services Centre Suite 23, 1st Floor, Eden Plaza City, Eden Island, Mahé Country, Seychelles.Phoenixfin Pte. Ltd – 2 Science Park Drive, #01-03 Ascent Country: Singapore |
| Huobi | Sinohope Technology Holdings Ltd (Formerly New Huo Technology Holdings Ltd), Hong KongHuobi Global Limited – 8 Marina Vw Central Business District , Singapore |
| Kraken | Payward Trading Ltd – C/o SHRM Trustees (BVI) Limited, P.O. Box 4301, VG1110, Road Town, British Virgin Islands |
| Gate.io | Gate Technology Incorporated – George Town, Midland, Cayman Islands |
| Bittrex | Bittrex Inc – 800 5th Ave, Seattle, WA 98104, United States |
| Bitstamp | Bitstamp Europe S.A. – 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy Of LuxembourgBitstamp UK Limited – 5 New Street Square, LondonBitstamp Global Ltd – Floor 4, Banco Popular Building, Road Town, Tortola VG1110, British Virgin IslandsBitstamp USA, Inc – 27 Union Square West, New York |
| MEXC Global | MEXC Technology Limited – 501 E 14th Ave, Denver, COLORADOMexc Global Foundation Ltd – 140 Paya Lebar Road, #10-09, Az Paya Lebar, SingaporeMEXC Global – Manglier Street, Mahé, Victoria, Seychelles |
| Bitfinex | Sinohope Technology Holdings Ltd (Formerly New Huo Technology Holdings Ltd), Hong KongHuobi Global Limited – 8 Marina Vw Central Business District, Singapore |
Factors Affecting Drop in Crypto Business
1. Harsh Regulatory Landscape:
The Government of India imposed a hefty 30% tax on crypto gains, followed by 1% TDS on each transaction. It significantly dampened investor enthusiasm and gave hints towards potential bans and cautious regulation. Also, strict capital controls limit the inflow and outflow of funds, discouraging long-term investments.
2. Global Market Downturn:
The crypto market has been rough since November 2023. Bitcoin, the flagship currency, is struggling to regain its former position, impacting investor confidence globally. On the other hand, rising interest rates and inflation created risk aversion among investors, leading them to shift away from volatile assets like cryptocurrencies.
3. Loss of Trust and Convenience:
The ban on international crypto platforms like Binance and WazirX has rattled domestic exchanges with concerns about transparency and security. Also, the lack of crypto infrastructure and payment gateways pushes investors towards advanced foreign platforms.
Consequences of the Crypto Exodus:
The harsh regulations and inconvenience have forced skilled professionals to migrate to countries with friendlier crypto policies, impacting India’s potential tax, revenue, and fintech sector. Also, Indian investors have limited access which makes them face higher risks in the future of digital assets.
Impact on the Indian Economy:
The decline in crypto trading activity impacts government spending and economic growth. Also, the uncertain regulatory environment discourages innovation.
Crypto does not have a promising future in India. The strict controls and regulations should be balanced with innovation, providing clarity for businesses.
The government needs to maintain a balance between promoting financial stability and the potential of blockchain technology. Strong infrastructural development, regulatory simplification, and tax incentives may open the door for a future in which cryptocurrency flourishes in India, luring investment and talent together with ethical governance.
However, it’s not all good and bad! Indian crypto community is showing signs of resilience with local exchanges adapting new regulatory landscape and diversifying their offerings. Also, the recent government clarification that cryptocurrencies are not illegal provides hope for future regulation.
