crypto: Despite regulatory hurdles, new crypto ventures abound


Experts say that the fundamentals favour India despite the government’s unfriendly attitude towards cryptocurrencies. India will have the maximum number of Web 3.0 developers in the next 12–18 months, and in terms of markets, India was one of the fastest-growing crypto markets globally before the crypto tax announcement.

Rohit Jain, the head of the recently launched CoinDCX Ventures, is swamped with pitch decks from aspiring crypto entrepreneurs even as the chorus of a long and harsh crypto winter grows stronger by the day.

“Every week, we hear 20–30 pitches. In the last 2-3 months, when we hadn’t even formally launched, we were getting close to 100 pitches every month, if not more,” said Jain. “We have closed seven investments and two are in the final stages.”

Unfazed by a severe crypto market crash, the imposition of a high income tax rate by the Indian government, a massive dip in trading volumes, the collapse of a popular token and continuing global uncertainty around digital asset regulation, Indian entrepreneurs have continued launching scores of new crypto ventures supported by strong angel funding.
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Not wanting to miss the Web 3.0 bus, Indian tech entrepreneurs are quickly finding need gaps in the crypto ecosystem and building new products that solve investor pinpoints.

“We have seen that for many young Indian investors, crypto was their first ever investment, but the biggest problem they faced was at the discovery stage of the transaction. Hence, we wanted a product like a smallcase for cryptos. The thematic baskets we offer make investing easier,” said Srivar Harlalka, Co-founder, Flippy.

The social discovery and investment platform that’s currently in beta stage, recently raised $1.15 million in its seed round led by Redstart Labs and other key investors, including Justin Caldbeck and Alex Lin.

Another startup, KoinBasket, raised $ 2 million in angel funding recently from Polygon’s Sandeep Nailwal, Nimesh Kampani, and Ripple’s Navin Gupta, is trying to build a differentiated business in a rapidly growing segment—ventures offering crypto baskets.

“We want to accelerate mass crypto adoption for the next billion investors. Though there are a few players who provide mutual fund type crypto baskets, accessing these baskets on their platforms is a nightmare due to the compulsory requirement of connecting exchange accounts via secret I keys. Our company empowers users to access their exchange accounts in a flash using their existing login credentials with no security risks,” said Khaleelulla Baig, Co-founder & CEO, KoinBasket, a thematic investment platform.

Experts say that the fundamentals favour India despite the government’s unfriendly attitude towards cryptocurrencies. India will have the maximum number of Web 3.0 developers in the next 12–18 months, and in terms of markets, India was one of the fastest growing crypto markets globally before the crypto tax announcement.

So despite the Indian government and RBI’s hostility towards cryptocurrencies, why do Indian entrepreneurs still want to launch ventures in the crypto space? “There is no good or bad time to launch. India is too big a market to be ignored. And after meeting some 40-45 fund managers, I can say that even they believe that policy bottlenecks will work themselves out in 3-5 years.” said Bharat Vivek, co-founder, Kassio, a crypto asset management platform that received $1.5 million in pre-seed funding from Aalto Capital, among others.

Apart from the young IIT crowd and experienced Web 3.0 developers, a bunch of successful Web 2.0 entrepreneurs are also now targeting Web 3.0 ventures.

“For them, Web 3 is the next big innovation engine for many years, with the ability to deliver a 10X customer experience,” says Jain.

A lot of the new entrepreneurs are building global businesses with a strong India bias to de risk themselves from the vagaries of the Indian regulatory regime.

“We will launch a global product to hedge our risks,” said Kassio’s Vivek.

But most of the new ventures have incorporated themselves in Singapore, Dubai, or even Denmark, like in Kassio’s case, where the government even helped connect the Indian entrepreneurs with local Danish investors.

“Given the high tax rate and compliance hurdles that have been put in place by the Indian regulators, a sort of quasi ban, if I may say, a lot of new entrepreneurs will simply move to places like Dubai and Singapore to start crypto ventures,” said Gaurav Dahake, CEO & Co-founder, BitBns.
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Updated: 05/23/2022 — 22:00