Crypto Exchanges facing turmoil

Crypto markets across the globe continue to operate under pressure. There is no let off in price correction in major cryptocurrencies. After a persistent fall, bitcoin is currently trading below $20,000, while Ethereum is hovering near $1,100. The crash in Terra LUNA that literally turned investments into almost nil, has shaken the faith in crypto as a digital asset.

The effects of the turmoil seen in cryptocurrency have started to roil the adjacent ecosystem. We have seen how the crypto hedge fund faced turmoil. Three Arrows Capital suffered large losses recently. Another crypto lender, Babel Finance had also paused withdrawals like Celsius. Similarly, token holders of Solend, a lending app on the Solana blockchain, voted to temporarily take over the account of a large user facing liquidation.

So, as cryptocurrencies witness a downward fall, the businesses created around these digital assets are also facing multiple issues in the form of liquidity availability, outflow of funds, exit of investors and many more. India has one of the highest numbers of developers in the world and this makes our country a melting pot of talent. Crypto is critical in exposing the country’s youth to international work culture and collaborating with individuals across geographies.

The cryptocurrency sector is responsible for more than 10,000 active jobs in India. The crypto sector creates a great demand for blockchain developers, and India has the largest pool of developers. Crypto and web3 are at a very exciting stage right now. Crypto is a booming industry and highlighted that jobs in NFT, crypto and blockchain in India have already grown by 804% post COVID. But, when we see the global statistics, the global crypto market is facing headwinds, how can India escape from such a scenario?

The reflections of the slowdown are already visible. Volume in Indian cryptocurrency exchanges has dropped in recent months. Many crypto exchanges have frozen new hiring and are taking various optimisation moves. Recently, one of the largest cryptocurrency exchanges, Coinbase, fired 18 percent of its employees globally. Due to this move, around 8 percent of the Indian workforce got affected. Similarly, many NFT-led ventures are also seeing low investors' interest amid the slowdown.

Crypto.com and leading platform BlockFi have also decided to cut off their workforce by 5% and 20% respectively. Crypto platform Gemini, founded by Cameron and Tyler Winklevoss, has also decided to cut down its workforce by about 10%. Crypto markets are seeing one of their worst crashes in recent history, with the broader market shedding about $300 billion in the span of a few days.

Technically, there is neither a ban on the use of cryptocurrencies (or crypto assets) in India, nor a regulation that governs their actual usage. However, crypto trading is going to be difficult in India now due to the 1% TDS rule for cryptocurrency and virtual digital assets (VDAs) transactions which has come into effect from the 1st of July 2022.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA