Despite regulatory challenges in India, Binance, the world’s largest cryptocurrency exchange, is bullish on the country’s crypto future. This comes at a time when Indian investors are subjected to a flat 30 per cent tax on their crypto investment, albeit without any regulatory framework.
“Blockchain startups are what garnered the attention of Binance and many global tech experts and investors in India,” Leon Foong, Head of APAC at Binance, tells indianexpress.com. He believes the Indian market has some fundamental competitive advantages — a very sizeable market and a large number of well-trained engineers.
“We saw India’s technology venture capital investment grow almost three-fold to $44.6 billion in 2021. If the right blockchain entrepreneurs can be matched with talent and capital, we will see an acceleration in the number of crypto and Web 3 projects that are built out of India.”
Foong is keen on pouring investment into India but believes that “a clear, progressive, and pro-innovation regulatory framework is necessary in giving investors comfort and certainty that India is the right place to be putting their money.”
The key is to let the ecosystem flourish and not implement restrictive policies that prevent the industry from growing to its full potential. “Ultimately when the pie is big enough and the Web 3 industry starts generating a large number of jobs and economic benefits, the multiplier effects from the industry can flow into the economy and ultimately boost the GDP of India,” he notes.
But before encouraging Indians to invest in crypto, Foong tells indianexpress.com that education in crypto is a must. Binance wants to encourage sensible and considered participation in the Indian digital asset ecosystem through proper education. He says it is important that an investor has a thorough understanding of virtual digital assets, including the risks, before investing. “Otherwise, investors will be left vulnerable to losses. As one of the industry leaders, we take the responsibility of offering Indian investors the right tools and channels to learn about digital assets and the ecosystem.”
Historically, virtual digital assets have provided investors with opportunities for significant returns within a short period of time. However, there are also a large number of tokens that lose substantial value after an initial “pump” in the token price. This volatility means that speculators are often at risk of losing their initial capital if the projects they invest in are not backed by a legitimate roadmap, utility, and community.
“Before jumping into any investment, we would strongly advise crypto investors to do their research and consider various data points. Platforms listing and launching coins should also be backed by a strong team that can run extensive research and analysis on projects. With the awareness initiatives that we are running in the Indian market, we hope to raise the importance of self-education and research for investments. Ultimately, we believe that with a more healthy investment trend in the market, the virtual digital asset ecosystem will develop,” Foong advises, adding that “this stands true in the context of the recent Luna-Terra crash as well.”
According to a Binance survey, around 55 per cent of the total population of India is below 25 years of age, and 34 per cent of the Indian population identifies themselves as Millennials. Like other disruptive technologies, crypto and blockchain have a greater adoption rate among younger generations because they tend to be tech-savvy.
“Millennial and Gen-Z investors are choosing crypto over other asset classes like mutual funds, gold, equities, etc., due to the chance to own a piece of upcoming technology space. With the rise of crypto, retail investors also have access to early-stage projects that only venture capital firms and angel investors previously had access to.”
In 2022, Binance is excited about bringing virtual digital asset education to the public, and are keeping an eye on gaming, NFT, Community-Fi, and emerging Metaverse ecosystems. “With further investments from global crypto players and the exponential growth of local layer 2 projects such as Polygon, we see tremendous opportunity for more Indian founders to build quality projects,” Foong adds.