No Data On Crypto Startups Exiting The Country: Govt Informs Parliament

The government does not maintain data on crypto startups exiting the country, Minister of State for Commerce and Industry Som Parkash said in the Parliament on Friday (July 22).

He was responding to a question by a Member of Parliament seeking clarity on the exodus of crypto startups from the country.

The MoS said that the RBI has registered its concerns over the ‘adverse effect’ of cryptocurrency on the country’s economy.

“…the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored, so it will have a destabilising effect on the monetary and fiscal stability of a country,” Parkash said in his reply. 

The MoS also quoted a slew of RBI circulars and orders that, he said, cautioned users and traders against ‘potential economic, financial, operational, legal, customer protection and security risks’ related to cryptocurrencies.

The minister also hinted at contentious aspects of cryptocurrencies including money laundering and financing terrorism. He also said that the central bank via various circulars also advised regulated entities to ensure due diligence regarding processing transactions related to cryptocurrencies.

While the RBI has made its opposition clear to cryptocurrencies, the government has not made its stance clear yet. Earlier this week, Finance Minister Nirmala Sitharaman told the Parliament that the central bank has recommended banning cryptocurrencies.

Last month, RBI Governor Shaktikanta Das called cryptocurrencies a clear danger, while Sitharman on numerous occasions has called for global regulations to curb the use of cryptocurrencies for money laundering and financing terrorism.

The vague regulations have led to more than half a dozen Indian crypto startups moving their base to places such as Dubai, Delaware and the British Virgin Islands. 

Big crypto names have shelved their expansion plans in India. Crypto exchange Coinbase suspended its full-fledged launch in the country and slashed its headcount by more than 10% in India.

In response to a separate question regarding mass layoffs by startups, Parkash said that there is no centrally compiled data on workforce dismissals by startups.

According to Inc42, 11,363 employees have so far been laid off by 34 Indian startups such as Ola, Meesho, Unacademy, Cars24, Vedantu, among others, in 2022.