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WazirX’s Co-founders set sail for Dubai, more to follow?

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Indian cryptocurrency exchange WazirX’s co-founders, Nischal Shetty, and Siddharth Menon have reportedly moved to Dubai with their families, as per local sources. At present, the trading platform continues to operate from its headquarters in Mumbai.

A representative of the firm denied rumors of shifting its headquarters from India saying that all employees of the cryptocurrency exchange, are working remotely. Another co-founder and chief technology officer Sameer Mhatre continue to operate from India, the report said.

“We are a remote-first organization with employees in over 70 locations. This gives all the company employees the option to work from anywhere, subject to their comfort and convenience unless they are required to travel officially.

WazirX is headquartered in Mumbai and there is no change in any of our operating procedures. It is business as usual,” the WazirX spokesperson told CNBC-TV18.

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WazirX's Co-founders set sail for Dubai, more to follow? 2

Sources earlier hinted that Shetty and Menon would be stepping down from the active daily operations at WazirX to focus on new projects.

WazirX founders set sights on Web3

A few months ago, Shetty announced he was working on a sharded layer 1 blockchain project called ‘Shardeum with US-based crypto innovator Omar Sayed. At the same time, Menon said he too would be launching Tegro, a Web3 game ecosystem marketplace, with game development firm SuperGaming.

But one cannot ignore the fact that India’s stiff crypto tax and hostile banks in contrast to the crypto-friendly nations such as Dubai, Singapore, Mauritius, and the Cayman Islands have pivoted domestic crypto businesses to shift their base. With Dubai being the nearest one, many Indian-based entrepreneurs, developers, and engineers thus see it as a viable alternative.

In a previous report by TronWeekly, Shetty has warned earlier how India stands to lose homegrown talent and miss out on the Web3 revolution. He then urges the govt, to reconsider its stance on digital assets

Four years ago, crypto exchanges ZebPay and Vauld moved to Singapore. Other firms like Polygon too, shifted to Dubai, while Mudrex set up shop in the US in 2019. Shilpa Mankar Ahluwalia, Partner and Head-FinTech at Shardul Amarchand Mangaldas & Co told,

“The lack of clarity on what the crypto regulatory framework will look like is making investors rethink their decision to make India the base for launching crypto platforms and products.”

Indian Crypto Exchanges’ Rupee Ban Spurs Panic Among Investors

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Indian Investors were left shocked after the two most prominent crypto exchanges CoinSwitch Kuber and WazirX have disabled rupee deposits for the purchase of cryptocurrency through a widely-used state-backed transfer network.

This has caused a massive public outcry as the clamor for regulatory clarity grows. The alarming development comes after the National Payments Corporation of India, operator of the state-backed United Payments Interface (UPI), which enables bank transfers, said it was unaware of its use by any crypto exchange.

Following the news, users took to Twitter to vent their frustrations. One user questioned the abrupt move saying that the platform should have informed beforehand. “CoinSwitch was not allowing users to load deposits on its app, although they could still withdraw funds. “You have closed the INR deposit without any information At least let us know how long it will be closed,” the tweet read.

Another posted a screenshot of their conversation with the customer service, apparently frustrated with the response. CoinSwitch, which reportedly has more than 15 million users, did not immediately respond to the development.

A source close to the matter said the decision by CoinSwitch to stop UPI acceptance was due to “regulatory uncertainty” after the NPCI statement. Another Indian trading platform WazirX also told users on Twitter, “UPI is not available,” adding that it had no estimated time limit to fix the issue.

In a statement, WazirX said its deposit facility via UPI had been put on hold in December but declined to elaborate. On April 1, Indian crypto users had raised alarm when the firm revealed that it was disabling rupee deposits via popular payments app MobiKwik “until further notice.”

Indian expert calls for regulatory clarity

In the month of February, India decided to tax income from cryptocurrencies and other digital assets at 30%, signaling that authorities recognized digital currencies, but refused to put them under a legal ambit dashing hope for millions of investors and the crypto industry in general.

Regulatory clarity is the need of the hour,” said Abhishek Malhotra, a founding partner of TMT Law Practice. “There are currently a lot of conflicting signals on the regulatory regime, leading to lack of certainty.”

Will India’s 30% Crypto Tax With No Offsets Spell Doom?

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India’s crypto policy seems to provide no respite for investors. On 21st March, the Ministry of Finance [MoS] Pankaj Chaudhary made it clear that crypto investors will not be allowed to set off losses incurred from one cryptocurrency against the gains from another crypto asset. Chaudhary was responding to questions during the Lok Sabha session [lower house of the Parliament]. The written statement read,

“As per the provisions of the proposed section 115BBH to the Income-tax Act, 1961, loss from the transfer of virtual digital asset [VDA] will not be allowed to be set off against the income arising from transfer of another VDA.”

For instance, if an investor loses Rs 500 in Bitcoin and gained Rs 800 in Ethereum in two separate transactions, he/she would still be taxed at 30 percent [Rs 240] on Rs 800. In case the investor was allowed to set off his/her loss in Bitcoin against his gains in Ethereum, he/she would have been taxed on Rs 300.

The announcement was initially made by Finance Minister Nirmala Sitharaman in her budget speech as she proposed a 30 percent tax on capital gains from crypto assets with effect from April 1, 2022. . Sitharaman had also proposed a 1 percent tax deducted at source [TDS] on proceeds of all crypto transactions.

One can check out TronWeekly‘s report on the concerns raised by experts on the TDS structure.

India’s Crypto Advocates Laments On The Harsh Policies

Nischal Shetty, CEO, WazirX feels that ‘Treating profits and losses of each market pair separately will discourage crypto participation and throttle the industry’s growth.’ Terming the news as ‘very unfortunate’, the exec appealed for reconsideration.

“It’s a continued effort to isolate and disincentivize cryptocurrency-related activities in India. The prevention of offset between different cryptos will probably negatively impact many traders,” said Rohinton Sidhwa, Partner, Deloitte India.

Recently, sources revealed that the Indian Government is planning to bring cryptocurrency under the ambit of goods and services tax [GST]. An official wishing to remain anonymous said “If that happens, the tax rate could range from 0.1 to 1 percent. So the priority would be to classify the digital assets category first and then discuss its tax rate.”

Indian govt. investigates Binance-acquired WazirX over forex law violations

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While Binance deals with immense pressure from regulators across the globe, an Indian crypto exchange acquired by Changpeng Zhao’s crypto platform has found itself in troubled waters with the country’s financial regulator.

Binance went on to explore and expand its services across the globe. Not very long ago, the platform was interested in one of India’s prominent crypto exchanges, WazirX. Soon after this, Binance acquired the Indian crypto platform even though the crypto scene in the country wasn’t very clear. While the status quo of crypto in India remains hazy, the country’s, Directorate of Enforcement [ED] called out WazirX for violating the Foreign Exchange Management Act.

Indian crypto exchange called out for infringing forex laws

India’s financial regulator Directorate of Enforcement [ED] issued a notice to WazirX for carrying out transactions worth $372 million or 2,790.74 crore rupees involved in violating specific forex laws. The Economic Times revealed that the Indian crypto platform was investigated for initiating cross-border payments without any government /regulatory oversight.

Addressing the same, an official from the ED told the news portal,

“These were carried out in violation of forex rules. WazirX’s platform allowed clients to transfer cryptocurrencies without proper documentation, making it a route for laundering. [..] Since money has crossed borders, the law of the land applies and one needs to be sure that this money isn’t cheap money (cheap money is a low-interest loan) or dirty money (used for illegal activities).”

Even though WazirX has robust KYC and AML processes, the ED official suggested that they weren’t enough to make certain digital assets weren’t being misused.

The entire crypto-verse fought long and hard to steer away from its association with the dark web. Once again linking Bitcoin to the dark web, the ED official added,

“In the absence of any official digital currency and regulation, there have been instances of Bitcoins being used to buy drugs on the dark net as well as for money laundering.”

As Indian crypto platforms have been working with the government to formulate better laws/ regulations for the industry, the latest news could hinder the progress.

WazirX Explores DeFi Despite Regulatory Uncertainty Clouding the Indian Crypto Industry

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On 15 August, India’s leading cryptocurrency exchange, WazirX, announced that it was preparing to create and set up its first Decentralized Finance (DeFi) product in partnership with the Matic Network.The move by the exchange to create a DeFi product comes at a time when the Indian crypto industry is clouded with regulatory uncertainty. 

An automated market maker allows one to list and exchange digital assets without the need of the regular order book. Formula methods are used to establish the price of an asset, therefore, developing a liquidity pool. Meaning, the price in an automated market maker only shifts when a transaction is made hence less vulnerable to external manipulation.

WazirX DeFi testnet to be launched in September

The CEO of WazirX, Nischal Shetty, declared the DeFi product was presently being designed, and that plans were underway to launch a testnet before the end of September this year. The grounds of partnering with Matic Network was because the network offered higher scalability and output compared to Ethereum.

The final product of this new product is intended to enable users to take part in the liquidity pool in exchange for WRX tokens. Furthermore, Shetty explained that it would allow institutional assets to take advantage of DeFi liquidity to carry out trades.

To increase liquidity, Shetty explained that WazirX would team up with several liquidity providers; however, he refrained from mentioning the prospects. Besides, he stated that WazirX plans to attract current users and new institutional funds.

Indian crypto industry facing regulatory uncertainty

The new DeFi product will be launched individually from the central WazirX exchange. However, Shetty insisted that they intend to pursue a deeper consolidation between the two platforms.
Shetty noted that he was convinced that favorable cryptocurrency laws will come to India, while commenting on the regulatory uncertainty facing the Indian crypto industry .This is an opportunity for WazirX to work on a new crypto project, as it risks coming to a dead end with hardly any user, if the draconian bill proposed in 2019 is passed..

 

Binance and WazirX Come Together to Establish $50 Million Worth Indian Blockchain Fund

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The influence of cryptocurrency companies on the world economy has been profound. Organizations like Binance have set up initiatives around the globe that have, in turn, positively affected economies, a cycle that continues until now.

According to new reports, Changpeng Zhao lead Binance decided to set up a blockchain fund specifically to cater to India. The Fund, worth $50 million, will work to support promising blockchain start-ups in the country.

Binance stated that they are planning to invest around $100,000 per startup, with the added benefit of opening up new avenues for companies. The cryptocurrency exchange promised users that with the latest venture, they will be able to use all features of Binance’s global blockchain ecosystem. The decision for the blockchain fund came only a few weeks after the Supreme Court of India had lifted the RBI crypto ban in 2018.

The investments will be made using Binance Coin, Binance USD and WRX coins. Since these cryptocurrencies come under the ambit of Binance, the company has the freedom to use them for their requirements. Data from the company showed that it plans to use $5 million worth of BNB, BUSD and WRX to power the blockchain fund. Blockchain for India was met with a lot of excitement by the Indian market, something that was also acknowledged by WazirX CEO Nischal Shetty.

During a recent interview, Nischal Shetty said:

“The projects will receive mentoring from the leaders within the Binance ecosystem.We also plan to provide support to universities and student organisations who want to set up blockchain tech incubators at their college to accelerate blockchain education in India.”

Binance plans to invest money in various Indian projects, including trading platforms, remittance solutions, digital asset wallets, etc. Some of the other key areas of focus for capital were decentralized applications, the DeFi platform and Fiat-to-Digital Gateway solutions. Binance has been focusing on India for some time now, as evidenced by its takeover of WazirX in 2019.

With the latest initiative, Indian blockchain entrepreneurs will be able to access the Binance Chain, Binance Cloud, Binance DEX and Binance Research. Along with this, users will also be able to utilize the benefits of companies such as WazirX, Trust Wallet and DappReview. Binance’s drive to India comes a few weeks after applying for a banking license in Singapore. Binance has also recently integrated with the Turkish bank Akbank.

Binance CEO Changpeng Zhao pointed out that the company had noticed several scaling projects in India and that pushed them to create the Blockchain fund. CZ, as he is more popularly known, believed that blockchain technology could become a great asset to India’s burgeoning economy. This belief was the inspiration for Binance acquiring WazirX last year.

Changpeng Zhao admitted that Binance had more projects in the pipeline, some of which would cater to the Indian audiences as well. This was done to capitalize on the growing number of people entering the cryptoverse from developing countries. Cryptocurrency proponents were fully behind Binance’s decision as it was one of the few positive developments in a bear-hit market. Investors were waiting out the dip in prices caused by the Coronavirus across the globe.