As India Crypto Volumes Crash, ZebPay Seeks Singapore, UAE Licence

The exodus of homegrown cryptocurrency exchanges from the country continues unabated. Now, it has emerged that one of India’s oldest exchanges ZebPay has applied for a licence in Singapore and is mulling a similar step in the United Arab Emirates (UAE).

ZebPay has always been an Indian company with a global outlook. While we have and will continue to explore opportunities in international markets, India is and will continue to be our highest priority. We remain committed to India and the opportunity this market offers. It has been and will continue to stay the focal point for ZebPay’s business,” a ZebPay spokesperson told Inc42.

The comment came in response to a report that specifically noted that the exchange was ‘looking overseas for growth’ amid increasing red tape around the crypto industry, quoting outgoing chief executive officer Avinash Shekhar. 

Shekhar further said that the 1% TDS imposed by the government on crypto transactions was ‘hurting’ trade volumes, adding that the levy ‘has to come down, otherwise things are not going to improve.’

He was also quoted as saying that the crypto startup has implemented salary cuts, including a 6% drop for non-management staff, to stave off the resulting toll from falling trading volumes. 

Founded in 2015 by Mahin Gupta, Sandeep Goenka and Saurabh Agrawal, ZebPay is a crypto trading platform with offices across the globe. The startup had last raised a funding of $1 Mn back in 2016 from a clutch of angel investors. Since then, it has scaled operations to countries such as Australia and Singapore. 

It claims to have onboarded more than 5 Mn users since its inception and has processed fiat transactions north of $10 Bn.

The Exodus Continues

With this, ZebPay has joined a growing list of crypto startups that have either departed from the country or are mulling moving their bases to countries such as Singapore or Dubai. Back in July, Inc42 had reported that more than half a dozen Indian crypto startups had moved to Dubai, Delaware and the British Virgin Islands (BVI) amidst growing crackdown on crypto startups.

While cryptocurrency exchange WazirX moved to Dubai earlier this year, crypto giant Polygon also relocated to Dubai nearly two years ago. 

While RBI has been explicitly expressing its views on cryptocurrencies, the government has been treading slowly by tightening regulatory screws around the crypto space. This has also been visible in government’s policies towards the space, which have likely been towards dissuading users from indulging in crypto trade. 

From a 30% tax on earnings from crypto transactions to the infamous 1% TDS, these moves have hit the trade volumes of many cryptocurrencies. The ensuing crackdown on a host of crypto players such as WazirX and Vauld, and not with reason, has left many wary of the space. 

Building on that, the Reserve Bank of India (RBI), on October 7, launched its concept note on central bank digital currency (CBDC). In the report, RBI made no qualms about its perspective on digital currencies, terming them as undermining India’s financial and macroeconomic stability. The report also spoke about the misuse of cryptocurrencies for money laundering and financing terrorism. 

On the other hand, crypto players still have failed to incorporate anti-money laundering and combating terror financing controls. A case in point has been the instance from Delhi where a man’s cryptocurrency worth INR 30 Lakh (currently valued in crores) was alleged fraudulently transferred to the military wing of Hamas, Al-Qassam Brigades. 

The result has been manifold. While the ongoing crypto winter has led to tumbling crypto trade volumes, the industry appears to be unfazed by the purported funding winter. 

An Inc42 analysis found that the first half of 2022 saw Indian crypto startups raising more than $773 Mn in funding across 39 deals, a 50% increase from the entirety of 2021 when these platforms raised a total of $513 Mn in 32 deals. It is, however, pertinent to note that Polygon accounted for a majority of the fundraise, raking in $450 Mn in March this year.

Additionally, even the investors appear to be sitting on a lot of dry powder, treading carefully in the current market volatility. While Andreessen Horowitz (a16z) has announced a $4.5 Bn crypto fund, other players such as Dragonfly Capital, Sequoia India and Lightspeed India also have raised hefty capital this year. Each one of them has a significant focus on Web3.

With markets still in the dumps and Indian red tape showing no signs of scaling down, it remains to be seen how the Indian crypto ecosystem shapes up by the end of this year.