On 6th April, Coinbase announced the acceptance of UPI (Unified Payments Interface) payments for its Indian users. National Payment Council of India (NPCI) which controls UPI announced a day later that it was unaware that UPI was used for crypto activities. Coinbase chickened out the very next day and stopped UPI Payments. A huge blow to Coinbase's expansion plans in the country. Mostly used and long-standing payment service provider Mobikwik has stopped service to exchanges and further dipped the volumes.
Even after Cryptocurrencies were made legal by law, several payment service providers and banks refuse to provide support to the exchanges. Looks like every financial institution in India has left Crypto Investors and Builders on their own. Most startups within the industry have moved their base out of the country. Dubai is taking out all the cream making itself the next blockchain hub. Most Indian politicians especially from the ruling party spread FUD against crypto even though state governments are building using Blockchain Technology like giving caste certificates and even college degrees on Polygon Network. The current environment in the country is mostly anti-crypto. Slowly the trading market is dying due to hefty taxes. Soon 1% TDS on every transaction will be charged as well, making it difficult for everyone to participate.
Making INR deposits in most Indian exchanges has become difficult. This resulted in a free fall of volumes. Although exchanges are back to working via the P2P payments model, there is a threat of getting notices from the Income Tax department regarding these transactions. Rules regarding them are not clear yet so most people won't risk it. Trading is almost dead!
In the latest news, WazirX cofounders, Nischal Shetty and Siddharth Menon have already shifted to Dubai although the CTO is still in India with its HQ operating as usual in Mumbai, the economic capital of the country. That's the best part of a remote working model which they have been using for all of their employees living in 70 different countries. Other top crypto exchanges like Zebpay, CoinSwitch Kuber, CoinDCX & Vauld are registered in Singapore. Polygon which was founded in India moved to Dubai two years ago. They saw it coming and acted upon it!
The Crypto brain drain is only going to grow unless the government comes out with a regulatory framework that promotes innovation. India is already a tech hub and it has the potential to become an even bigger blockchain hub in the upcoming years. We already have two Crypto Unicorns that serve Indian audiences. I can only hope that the government sees the potential and act accordingly.
The beauty of WEB 3 is that it knows no boundaries, laws, or taxes. Governments all over the world think it's a sin to have such privileges. They know and practice control 24x7. Even though the GOI has proved itself to be incapable of providing a facilitative environment for the builders to operate, WEB3 continues to expand. Trading crypto is only a small part of it. People can still earn and make money from their digital assets. They can still build an application and participate in this new economy. A growing number of Decentralized Exchanges are popping up which provide a safe way to trade without any restriction from government policies. Builders are going to build and find ways to solve these petty issues that come and go. WEB 3 projects in India are shifting their bases to more crypto-friendly countries. Since most startups are not reliant on heavy office infrastructure, they can easily operate remotely. The Indian government may realize it or not but nobody is going to wait for them to wake up. All talent will be lost the more we delay support.
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