Several global crypto exchanges are considering entering the Indian market, despite the regulatory uncertainty in the country.
According to Reuters’ sources, these exchanges include Kraken, Bitfinex, and KuCoin. One source said these companies have already initiated talks to understand the Indian market and entry points better.
While one exchange has already started due diligence for an Indian firm that it’s considering acquiring, the other two are still weighing their options. They are considering whether to set up their own subsidiaries within the country or to buy a local firm.
Binance took the latter route in its foray into India, purchasing local exchange WazirX in 2019. Meanwhile, these market entry considerations come amid an uncertain regulatory environment in India.
Indian crypto environment
In March, the Indian government had intentions to introduce a bill in parliament that proposed a ban on cryptocurrencies. The RBI had previously enacted such a prohibition in 2018 but was rescinded by India’s Supreme Court in March 2020. However, the fate of the proposed legislation currently remains in limbo. Apart from this, India has no rules specifically for cryptocurrency exchanges wanting to enter the country.
Opponents of the potential ban argue that it would stifle the innovative potential of the emerging economy. According to industry sources, there are 15 million crypto investors in India holding an amount worth over 100 billion rupees ($1.37 billion). Others argue that cryptocurrencies would be the most cost-efficient way for Indians abroad to remit funds home.
However authorities are concerned that the wealthy and criminals would hide their wealth digitally. Also there are concerns that speculative flows of funds through digital channels could destabilize the financial system.
Despite all the uncertainty over what outcome may prevail in India, crypto exchanges clearly feel it is worthwhile in taking the risk of gaining entry rather than missing out. “It’s clear that the rewards outweigh the perceived risks, which is luring these global firms to the Indian market,” said Darshan Bathija, CEO of Vauld, a foreign crypto exchange with a presence in India.