The words of the Lok Sabha Bulletin, released late on Tuesday, have shook both investors as well as venture capitalists.
The bill seeks to ban all private cryptocurrencies in India but allows for “certain exceptions for the underlying technology and promotion of its use”.
Over the past few days, major cryptocurrency exchanges have rushed to hold calls and meetings to placate investors.
Over the past two years, investors including Silicon Valley-based venture fund Andreessen Horowitz, Sequoia, Facebook co-founder Eduardo Saverin’s B Capital, and Coinbase Ventures have together invested more than $500 million in multiple crypto exchanges.
Insiders say all the top exchanges – CoinSwitch Kuber, CoinDCX and WazirX – have held calls with investors, including Strategic.
“The main concern that is being raised is is there something different this time, and what is the strategy going forward. We do not think the government will ban crypto assets completely and that is what we said during the call to investors,” said a promoter at an exchange.
CoinDCX and Coinswitch Kuber are both worth over $1 billion, while Binance-owned Indian crypto exchange WazirX is worth around $200 million.
“Investors understand the regulatory landscape in India which has been similar for the past few years. The confusion that arose a few days ago may last for about four weeks,” said Satwik Viswanath, co-founder and CEO of Unocoin, a cryptocurrency exchange that has received four funding rounds so far from Draper Associates, XBTO Ventures and 2020 Ventures. Have gathered. ,
Vishwanath said, “The question that our investors ask these days is what do you think is going to happen or how do you think we should be prepared and go ahead with whatever is required. needed.”
This comes at a time when several exchanges have reached out to their users to explain the situation after a pushback from investors.
According to people familiar with the developments, ongoing investments have been put on hold in at least two cases.
However, crypto industry executives said that the panic was premature.
Chief Operations Raj Karkara said, “Most of the concern is about the classification of crypto, how private and public crypto will be classified, taxation, etc. We recommend that all our investors remain calm and aware of the details of the upcoming bill. Stay updated.” Officials of ZebPay, a cryptocurrency exchange.
Holders of the cryptocurrency went into panic-sale mode on Tuesday, flooding exchanges at midnight, as the words banned all private virtual coins. Prices of the most valuable cryptocurrencies such as bitcoin and ethereum fell by up to 15%.
The crypto exchange, which urged investors not to rush into the sale, expects PE and VC funds to withdraw India’s plans, after the government gives them clarity.
“As far as fresh investments are concerned, it will be back to normal once there is some clarity during this period. This month will only have the effect of mobilizing fresh investments,” Vishwanath said.
Many are still hopeful that new investments will not be affected.
“This will not delay or impact investments. We believe that the government will bring regulations for crypto assets in India – which will only strengthen the foundation of crypto trading in India. These regulations will provide credibility to the industry, ensuring that our customers are safe, financial stability is sound, and the country is able to take full advantage of revolutionary crypto technology,” said Vikas Ahuja, CEO, Crosstower India.