 "Rajagopal Menon, vice-president at WazirX")
The user base of India’s crypto industry has witnessed a churn on the back of reasons such as regulatory uncertainty, market volatility and taxation of assets in the past few years.
That said, close to 33 per cent of the total respondents polled in the 2022 India edition of KuCoin’s crypto report reasoned that government regulation was holding them back from investing in crypto.
Other major reasons included market volatility, confusion about crypto investment products and risk management of their portfolio.
However, that is set to change with accelerated discussions about crypto regulations at multilateral forums like G-20 driven by India, according to Rajagopal Menon, vice-president at WazirX, a crypto-exchange platform.
Last week, the road map on crypto assets proposed in the International Monetary Fund’s (IMF) and Financial Stability Board’s (FSB) synthesis paper was adopted by G-20 Finance Ministers and Central Bank Governors (FMCBG) at Marrakech, Morocco.
The IMF- FSB roadmap includes global coordination, cooperation, and information sharing on crypto assets, implementation of its policy frameworks, an outreach beyond G20 member jurisdictions, and development of a common framework to address data gaps.
“With the adoption of the IMF-FSB roadmap, G20 nations are mandated to implement it by 2025. India will now enter election mode, so for the next six months, we might not see a new regulatory body or something similar to that being set-up. But once the new government comes to power, this will be one of the first things they will have to do as it has been committed already,” Menon estimates.
He explains that he is hopeful for crypto sentiments to improve on the back of positive discussions at different levels next year.
“Everything is going to happen next year. Sentiments and investments will improve next year. The bull run will happen next year. Regulations will happen next year. In short, Santa Claus is coming to town next year,” he elucidated.
Menon believes the crypto market is cyclical in nature and his firm WazirX is operating for the next bull market.
“WazirX was established in 2018, and we have been part of multiple cycles of the crypto market. After the bull run in 2021, the management saw that the market was overheated. Thus, we were in for a bear market, and hence planned decisions ahead of schedule like optimising costs such as restructuring the team which was a tough thing to do,” he explained.
WazirX, which has a base of 15 million users, enables users to trade in multiple currencies such as Bitcoin, Ethereum, Ripple, among others.
Menon adds that the company is in the process of breaking even.
“On a unit economics level, we might not be as profitable as we want it to be, but we are breaking even. Some months are good, while some months are bad. However, that said, next year is going to be a good one for the entire industry,” he said.
The company, like other exchanges, has witnessed a fair share of challenges in its operations.
WazirX said it recorded a 63 per cent slump in trading volume one day after TDS (tax deducted at source) was imposed on crypto assets . As of March 2023, the company's volumes remain impacted by as much as 90 per cent due to tax impositions.
Alternatively, one of FSB’s high level recommendations in the synthesis paper explains the need for authorities to cooperate and coordinate with one another; on the domestic and international front.
This is essential to enable effective communication among cross-border stakeholders to share information, support each other to fulfill respective mandates and encourage consistency of regulatory and supervisory outcomes.
That said, close to 33 per cent of the total respondents polled in the 2022 India edition of KuCoin’s crypto report reasoned that government regulation was holding them back from investing in crypto.
Other major reasons included market volatility, confusion about crypto investment products and risk management of their portfolio.
However, that is set to change with accelerated discussions about crypto regulations at multilateral forums like G-20 driven by India, according to Rajagopal Menon, vice-president at WazirX, a crypto-exchange platform.
Last week, the road map on crypto assets proposed in the International Monetary Fund’s (IMF) and Financial Stability Board’s (FSB) synthesis paper was adopted by G-20 Finance Ministers and Central Bank Governors (FMCBG) at Marrakech, Morocco.
The IMF- FSB roadmap includes global coordination, cooperation, and information sharing on crypto assets, implementation of its policy frameworks, an outreach beyond G20 member jurisdictions, and development of a common framework to address data gaps.
“With the adoption of the IMF-FSB roadmap, G20 nations are mandated to implement it by 2025. India will now enter election mode, so for the next six months, we might not see a new regulatory body or something similar to that being set-up. But once the new government comes to power, this will be one of the first things they will have to do as it has been committed already,” Menon estimates.
He explains that he is hopeful for crypto sentiments to improve on the back of positive discussions at different levels next year.
“Everything is going to happen next year. Sentiments and investments will improve next year. The bull run will happen next year. Regulations will happen next year. In short, Santa Claus is coming to town next year,” he elucidated.
Menon believes the crypto market is cyclical in nature and his firm WazirX is operating for the next bull market.
“WazirX was established in 2018, and we have been part of multiple cycles of the crypto market. After the bull run in 2021, the management saw that the market was overheated. Thus, we were in for a bear market, and hence planned decisions ahead of schedule like optimising costs such as restructuring the team which was a tough thing to do,” he explained.
WazirX, which has a base of 15 million users, enables users to trade in multiple currencies such as Bitcoin, Ethereum, Ripple, among others.
Menon adds that the company is in the process of breaking even.
“On a unit economics level, we might not be as profitable as we want it to be, but we are breaking even. Some months are good, while some months are bad. However, that said, next year is going to be a good one for the entire industry,” he said.
The company, like other exchanges, has witnessed a fair share of challenges in its operations.
WazirX said it recorded a 63 per cent slump in trading volume one day after TDS (tax deducted at source) was imposed on crypto assets . As of March 2023, the company's volumes remain impacted by as much as 90 per cent due to tax impositions.
Alternatively, one of FSB’s high level recommendations in the synthesis paper explains the need for authorities to cooperate and coordinate with one another; on the domestic and international front.
This is essential to enable effective communication among cross-border stakeholders to share information, support each other to fulfill respective mandates and encourage consistency of regulatory and supervisory outcomes.
