The sharp drop in cryptocurrency prices and a steady decline in the virtual digital asset market globally have increased the desperation of the Indian crypto exchanges, forcing them to rethink their business.
Many crypto exchanges globally have laid off staff as costs begin to bite them.
"The resilience and viability of crypto businesses are being tested to the hilt, leading to restructuring and layoffs. The trust deficit caused by multiple scams and insolvencies have forced investors to stay away from investing in crypto markets," said Sharat Chandra, co-founder of India Blockchain Forum.
Chandra said that some crypto platforms have pivoted to a "wealth-tech" platform model to cater to investors’ wider needs. “Pivot or perish” is the survival mantra for the crypto ecosystem, he added.
CoinDCX, one of the popular crypto exchanges, has fired a number of employees as part of cost-cutting measures, moneycontrol.com reported. The company started a restructuring process last month, with marketing, branding, and activation departments taking the biggest blow, it said.
However, CoinDCX has rejected the report, saying, "We are in the build phase. Some products are on the anvil, and this has paved the way for generating new roles for which we are hiring. This has also given an opportunity for an internal reshuffle. The restructured teams are assigned interesting mandates to contribute to CoinDCX's growth journey in the Web3 space," it said.
Are Crypto Ventures Losing Hope?
After the government levied a 30 per cent tax on virtual digital assets (VDAs) last year, the trading volume of exchanges, such as WazirX, CoinDCX, Coinswitch, Kuber, and Bitbns, fell by over 90 per cent.
The global crypto exchange FTX’s collapse was the worst blow to the market, triggering panic sales and negative publicity. Questions were raised about the exchanges’ transparency, forcing many of them to declare their proof of reserves (POR), which has become almost a norm now. However, experts say it won’t spell gloom for builders. Projects delivering utility will survive these turbulent times, they say.
Earlier, CoinSwitch, a crypto investing app, launched a new brand identity for itself, with a new logo, colour, font, and an updated mobile app. The company said it would diversify into other asset classes.
Shrikant Bhalerao, the co-founder of Seracle, a blockchain company, says it was tough on crypto entrepreneurs last year. However, “one bad year is not the end of the world,” he says.
Avinash Shekhar, the former CEO of crypto exchange ZebPay, has recently announced the launch of his own Web3 startup 'TaxNodes’. The platform aims to enhance profitability, taxation and reporting in the crypto space for retail investors and exchanges.
Likewise, in February 2022, WazirX co-founders Nischal Shetty and Siddharth Menon quit their day-to-day roles in the organisation backed by Binance. Shetty started his Web3 project Shardeum, while Menon launched the Tegro marketplace for game assets.
Purshottam Anand, the founder of Crypto Legal and member of India Blockchain Forum, said the industry witnessed similar bear markets before, and it would improve once appropriate regulations are enforced to keep the bad players in check.
Exchanges Fooled Indians
Over 73 per cent of crypto users lost their money, and small investors were the most affected, The Hindu reported. The Enforcement Directorate opened criminal proceeds in alleged money laundering cases worth Rs 907 crore involving crypto exchanges and detained three people. The minister of state for finance, Pankaj Chaudhary, told parliament claimed that 12 cryptocurrency exchanges were engaged in Goods and Services Tax (GST) avoidance, totaling Rs 87.60 crore. Additionally, ED raided the offices of several exchanges, including WazirX and Coinswitch Kuber.