Foreign investors are increasingly put off by regulatory hurdles, particularly involving payment solutions, in India’s cryptocurrency sector. This has now prompted stakeholders to take up the issue at the ongoing annual World Economic Forum (WEF) meeting in Davos, Switzerland.
India must end the uncertainty and protect investors, Ashish Singhal, CEO of one of India’s largest cryptocurrency platforms CoinSwitch, has said. “Users don’t know what will happen with their holdings. Is the government going to ban, not ban, how is it going to be regulated?” Singhal told Reuters on May 22.
A bumpy ride for Binance and Coinbase
Regulatory snags in the transfer of funds, along with a regressive taxation policy, have stifled the cryptocurrency industry’s growth in India.
On April 10, the US-based platform Coinbase suspended the option to buy digital coins through India’s widely-adopted digital payments channel, Unified Payments Interface (UPI), on its app in India. In May, CEO Brian Armstrong said the move was prompted by the “informal pressure” from the Reserve Bank of India.
Domestic exchanges such as CoinSwitch, WazirX, and CoinDCX followed suit a few days later.
Meanwhile, Binance is still waiting for “the ideal point” to launch in India, according to Coindesk. The cryptocurrency exchange, however, will face similar risks even though India is touted to emerge as a hub of Web3.0 giants.
“India [must not] view investments from global crypto-exchanges as a disruptive force,” Vivan Sharan, a technology and policy expert, told Coindesk. “Rather, it should consider them an economic opportunity that can be harnessed through regulation. Exchanges are important nodes within Web3, and can easily be nudged to help mitigate the types of risks that the crypto ecosystem is receiving flak for these days.”