Industry sources told Reuters that global digital currency exchanges are looking into setting up shop in India, following in the footsteps of market leader Binance, as the government in New Delhi dithers over creating a law that may outlaw cryptocurrencies. Opponents of the proposed prohibition argue that it will limit the economic strength of a young, tech-savvy nation of 1.35 billion people. Although there is no official data, industry analysts estimate that there are 15 million cryptocurrency investors in India, with total ownership of over 100 billion rupees ($1.37 billion).
According to four sources, US-based Kraken, Hong Kong-based Bitfinex, and rival KuCoin are actively exploring the market, which analysts think will only become larger if given free freedom. “These businesses have already started talking to better understand the Indian market and entrance points,” said a person close to an exchange that had started due diligence on an Indian firm it was considering buying. He said the other two exchanges were in the early phases of choosing whether to enter India and assessing their choices, which essentially boil down to establishing a subsidiary or purchasing an Indian company, as Binance, the world’s largest exchange, did two years ago.
Bitfinex has declined to comment, and Kraken and KuCoin have not responded to requests for comment. According to the data portal CoinMarketCap, all three exchanges are among the top 10 in the world in terms of traffic, liquidity, and the dependability of their reported trading volumes.
“The Indian market is massive and just getting started; if there was more legislative clarity by now, Indian customers would have been spoilt for choice in terms of exchangers, because everyone wants to be here,” said Kumar Gaurav, founder of digital bank Cashaa.
Cryptocurrencies, according to proponents, would be the most cost-effective way for Indians living overseas to send money home. However, authorities are concerned that wealthy individuals and criminals may be able to hide their assets in the digital realm, and that speculative capital flows through digital channels, which are not subject to India’s tight exchange rules, may destabilize the financial system.
Bill has been postponed, and its destiny is unknown.
Until now, there have been no particular restrictions in place for cryptocurrency exchanges intending to set up shop in India. Instead, they may register as technology companies to gain a very simple admission. Binance purchased WazirX, an Indian cryptocurrency business that allows users to purchase and sell cryptocurrencies with rupees through the Binance Fiat Gateway, in 2019.
Coinbase, a US-based exchange, has revealed plans to open a back office in India. However, as the global regulatory environment for cryptocurrencies deteriorates, Indian authorities are becoming more cautious. Banks and online payment businesses in China have been prohibited from offering services linked to bitcoin transactions. In addition, by March, the Indian government planned to bring a law to parliament proposing a ban on cryptocurrencies, making their trading and holding illegal. However, the administration has stalled it, and contradictory pronouncements have since exacerbated doubts about the bill’s fate.
In the meantime, big Indian banks have begun to cut relations with cryptocurrency exchanges and traders, citing the Reserve Bank of India’s concerns about the volatile asset’s financial stability threats. The Reserve Bank of India is considering introducing its own digital currency, although Governor Shaktikanta Das described the proposals as a “work in progress” in February.
Despite the uncertainty over what India will do, some digital currency exchangers plainly believe it is better to get in now than to miss out. “It’s evident that the gains outweigh the perceived risks,” Darshan Bathija, chief executive officer of Vauld, a foreign crypto exchange with a presence in India, said.