How Indian Crypto Firms Are Adjusting to Market Decline

By Mohammad Roshan

It has been a torrid year for crypto. The decline in the prices of Bitcoin and other crypto assets from highs reached late last year, combined with the fall of several prominent industry players, has led to what has been described as another “crypto winter”.

The Indian crypto ecosystem has not been spared by this difficult period. It is indeed a struggle for the existence of several players with falling transaction volumes, a persistent regulatory vacuum, opposition from RBImoney laundering accusations against exchanges – all of this happened in the midst of the global crypto winter.

Indian crypto businesses were already grappling with new tax rules introduced earlier this year, which included a 30% tax on income and a 1% TDS on all transactions. These new rules have significantly dampened the sentiment of investors, especially traders, which has had an after effect on Indian crypto exchanges and other businesses. Major crypto exchanges in India were earning millions of dollars in revenue due to high trading volumes saw a drastic drop in trading volume, which was exacerbated by the general market downturn.

Among these conditions, reports show that investments in crypto start-ups have decreased by 75% in 2022. Although this is linked to world events and the overall slowdown in tech venture capital funding, it is largely due to events recent in the field of crypto and India. the government’s aversion to crypto. This had huge implications for Indian crypto firms, which are mostly venture capital backed.

In this struggle for survival, crypto firms in India have had to revise their business strategies and lighten up.
To maintain a longer lead, several companies have taken extreme measures such as reducing all marketing and advertising expenses. The focus is on being frugal in terms of all other expenses, as founders race frantically to ensure their companies are well capitalized to survive this scenario.

We have already seen several companies suspend their hiring plans and some have even laid off part of their workforce or canceled offers of employment that had been made. Companies hiring have taken a very cautious approach. Product launches and new investments have also been delayed. There are also unverified reports that some crypto companies have moved their operations from India to more crypto-friendly jurisdictions.

Some crypto businesses, especially exchanges, have diversified into alternative revenue streams, exploiting potential adjacencies. For example, CoinDCX, launched a venture capital investment arm that invests in startups in the Web3 infrastructure space. Coinswitch Kuber meanwhile aims to become a broader retail investment platform, with other asset class options such as mutual funds and US stocks on its app. Investigating alternative business models and revenue streams could also be a way for crypto firms to generate cash in this crisis scenario.

One of the main challenges for businesses is to restore customer confidence in crypto. Amid the prevailing negative environment, we have seen several prominent exchanges come out and reassure their users about fund storage, how to use it and implement new protocols to ensure client funds are safe and secure. there is transparency and communication between the different stakeholders. who are involved.

At the same time, this can also be seen as a wonderful time for the Indian crypto industry to put their heads down and build for the future, with minimal distractions. Even in the previous bear market, we saw how it was the builders who managed to survive the downturn that reaped the benefits of the bull market.

A game has already started. For example, as changes emerge in crypto investment models, companies have quickly embraced these trends. There has been a tendency to stick only to stablecoins like Bitcoin, rather than trading. To take advantage of this, several exchanges have offered offers such as trading fee discounts and products that allow users to have SIP in these assets.

Others have also offered or are partnering with self-custody solutions, encouraging users to keep their Bitcoins and other assets safe in hardware wallets. The industry and market conditions have changed drastically over the past year, and lean crypto businesses that continue to build and add value to customers will continue to survive in the future.

The author is co-founder and CEO, GoSats

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