India continues to be the top adopter of cryptocurrency services in the world despite the lack of regulatory oversight and a high tax bracket, according to a recent report by crypto data platform Chainalysis. However, in the absence of government regulations, and high taxes, exchange platforms have witnessed lowering volumes, prompting them to expand beyond trading. In an interview with DH’s Anjali Jain, CoinDCX co-founder Sumit Gupta highlighted the crypto exchange's efforts to grow the country's web3 economy, the role positive regulations can play, and the bullish outlook many have for the country's developers to contribute to the global ecosystem.
Edited excerpts.
What is your strategy for India’s crypto market and the challenges you face?
The volumes are currently down because of tax deducted at source but I think our strategy for the Indian market remains the same. We are extremely bullish on India. We want to go deeper into India because we believe that India is going to be the largest market globally and that can be justified by the fact that it is number one already in terms of grassroots crypto adoption in this bearish market. Imagine what will happen if India regulates this asset class. There is a huge potential from customers. It is also our home market. So if you combine all of that, I think it makes logical sense to go deeper into the region and that's basically what our strategy is.
If you look at it from a numbers point of view or key metrics, it may look lower because of TDS. but we also believe that this is a temporary thing and it should get reversed. I think the volumes are still there, just that they have moved offshore to international platforms or P2P platforms which are not the best platforms from a customer protection point of view. So, I hope the government understands that and reworks the rate. TDS is good, but the rate is very high.
What is your outlook for decentralised applications coming out of India?
One of the missions that we have in the company is how we can build or drive adoption of crypto assets and DeFi applications in general and we believe that this is one golden opportunity that India has where we can build these products from India and serve it globally. It is the opposite of what happened in the internet era when we were the consumers. Now, we should be the builders. We have the highest density of web3 talent pool in the world, about 10 million plus developers who can potentially build in the sector. In spite of tough regulations, this is the level of adoption we have seen in India. Imagine if we create a conducive environment for the sector.
It's completely technologically led. You don't need any physical operations or people in the US. You can build in India and serve the US and that is going to add economic value to the country. In fact, one of the Nasscom reports says that the web3 sector can add $1 trillion to the country's economy over the next 10 years. There is a whole lot of value to be captured from the sector. All we need are progressive supportive regulations and not regulations which contribute to things like brain drain or talent moving overseas.
What are your thoughts on the Indian government's insistence on creating a global regulatory framework?
One thing that we know for sure is that the government has now announced in public that they don't want to take any decision in silos. Whatever they will do will be in alignment with G-20 or even beyond that. It's the right thing to do given that the asset class runs on top of the internet and it's digital in nature. You can't practically classify it with geographical boundaries.
Every country has their own nuances when they come up with regulations. It's not going to be 100% copy paste, but maybe the broad principles which are already outlined in the Financial Stability Board-International Monetary Fund report will be followed. A lot of these principles are already outlined. The details of it is something that may take time and we expect as the global regulation talks pick up, India will follow that and come up with consistent regulations in the country as well.