How Crypto Firms Hedge Their Bets Amid Regulatory Uncertainty

Entering new countries: check

Diversify their product portfolios: check

Facilitating peer-to-peer transactions: check


These are some of the things that crypto exchanges in India are doing to minimize their risk at a time when they have yet to receive the blessing of the country’s central bank and have seen their trading volumes plummet after the government began taxing crypto assets from April 1. .

To make matters worse, the National Payments Corporation of India, which enables digital payments, recently expressed reservations about the flow of funds through the Unified Payments Interface (UPI) for crypto exchanges, putting a damper on plans to expansion of many crypto exchanges in India. .

To combat declining trading volumes, second Indian crypto unicorn CoinSwitch Kuber plans to expand its offerings to include Indian mutual funds and equity products linked to US-listed stocks.

“There are bank-based discount brokers and traditional brokers. But we want to be something more than those two. Our vision over the next five years is to provide personalized suggestions using robotic advice on what to buy or sell, when to buy or sell, and why others in the market are trading a particular stock,” said said the co-founder and managing director of CoinSwitch Kuber. officer, Ashish Singhal.

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The diversification made sense because most users of the crypto exchange were novice investors who lacked exposure to other asset classes, Singhal pointed out.

“As they get older, they want to invest in more stable instruments. This is why we are venturing into this space,” he said, adding that CoinSwitch Kuber still wants to continue to be a crypto exchange first.

According to Sidharth Sogani, founder and CEO of market research firm CREBACO Global, which focuses on all things crypto, the decision to diversify could be a daunting task.

“I think they will face compliance and licensing challenges as a crypto company. But the good part is that if they get it, they will pave the way for more Web3 companies to enter this space,” Sogani told DH. Web3, often described as the future of the internet, is a decentralized iteration of the web that runs on blockchain technology.

Despite potential hurdles and lack of experience in new product categories, this move made sense as there was a need for crypto exchanges to recover trading volumes until there was regulatory clarity on crypto assets. , according to Sogani.

Some crypto exchanges such as ZebPay have decided to venture into markets such as the United States and the United Arab Emirates while waiting for India to rethink its attitude towards the emerging asset class.

“In the United States, we already have regulations in place. For this reason, companies are investing in cryptocurrency, which will help us grow. The UAE is an emerging market when it comes to crypto,” ZebPay CEO Avinash Shekhar told DH earlier this year.

Meanwhile, like most other crypto platforms, Chennai-based Giottis Cryptocurrency Exchange is banking on peer-to-peer trading to drive its business until the UPI issue is resolved.

Peer-to-peer (P2P) trading is a type of cryptocurrency exchange method that allows traders to trade directly with each other without the need for a centralized third party to facilitate transactions. P2P trading platforms work by matching buyers and sellers to facilitate trades and charge fees for each transaction made.

“The lack of UPI and the bear market in crypto has caused our volumes to drop, but business continues. Peer-to-peer (trading) is always an option. This could affect our volumes, but it will keep our business going. We hope to resolve the UPI issue soon. This will help us exceed our normal trading volumes,” said Arjun Vijay, co-founder and COO of Giottos.

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How Crypto Firms Hedge Their Bets Amid Regulatory Uncertainty

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