Majority of Indian startups including Bitcoin India, Koinex, Zebpay etc. closed operations or moved outside India or launched P2P platforms to sustain post RBI's crypto ban on financial institutions.
After the Reserve Bank of India (RBI) called for a banking restriction last year on all financial institutions offering services to cryptocurrency exchanges, the country’s crypto ecosystem saw its first acquisition with global crypto exchange Binance acquiring peer-to-peer crypto exchange WazirX launched in 2018. Majority of Indian startups including Bitcoin India, Koinex, Zebpay etc. closed operations or moved outside India or launched P2P platforms to sustain. However, WazirX had launched the P2P exchange — auto-matching P2P engine to help traders to convert Indian Rupees to crypto and vice versa, right after the ban. “The move (RBI ban) proved to be a game-changer and made the platform cheapest, fastest, and simplest way to trade cryptocurrencies using INR in India,” the company said.
“This is the first-ever acquisition of a crypto startup in India. I don’t know the alternate world because it was just a month after we launched we saw the banking ban. We have been operating more like a P2P platform almost all our life and growing really fast in India. Of course, if the ban wasn’t there, we would have grown faster. But regulations is something that as a country we should all deal with,” Nischal Shetty, CEO, WazirX told Financial Express Online. The company had also launched Smart Token Fund (STF) – a community-driven programme for crypto enthusiasts to allow crypto trading experts to grow their cryptocurrency portfolio on WazirX in order to attract more users on the platform.
Binance, founded in China in 2017, runs a larger blockchain ecosystem including the Binance Exchange that the company claimed to have users from more than 180 countries, Binance Labs — the venture capital and incubator arm of the group, Binance Launchpad — a token sale platform, education and market research portals Binance Academy and Binance Research etc. “We have a shared mission of promoting crypto to the masses where we want to make it easier for Indians to integrate into the crypto ecosystem and Binance is the largest in the world with all the resources and reach. So I wanted to see how I can expedite what I am already doing. This was the major motivation for the deal,” Shetty said.
While Shetty didn’t disclose the amount for the deal but he confirmed that there won’t be any employee layoffs even as WazirX will continue to operate as an independent brand. “We have been a global exchange while our biggest user base is in India,” he added. The company had earlier this year went global by allowing foreign users to trade on its P2P platform. “Building fiat-to-crypto bridges remain a key mission for Binance, and WazirX will help this by providing a simple and cohesive way to purchase cryptocurrencies in a country which is home to more than a billion people,” Wei Zhou, CFO, Binance said in a statement. WazirX app has over 2 lakh downloads.
Nonetheless, government regulations around the ecosystem may not be streamlined soon. An inter-ministerial committee had submitted a draft bill titled Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 in February this year. While the government had informed the Supreme Court earlier that the bill is likely to be introduced in the Winter session of the Parliament but among the bills to be taken up, the one on crypto is reportedly not included.