One of the major talking points in the crypto space has been bitcoin’s ability to continually dodge government regulations. And while the protocol is resistant to almost all sanctions, the businesses built on top of the technology aren’t. A primary example of this paradox has been the developments in India where draconian crypto regulations have forced companies like ZebPay to more crypto-friendly locales.
It’s All About Location
Malta, Singapore, Bermuda, Gibraltar, and a few others have all emerged as capitals in the crypto community for a single reason. Each nation, to one extent or another, has been highly-welcoming to exchanges, payment platforms, and all things digital asset. On the other side of this equation, countries like China, Russia, and India are clamping down on any crypto use in the country.
The result? A series of elaborate business remodels, pivots, and regulatory arbitrage. It has also meant that workers in the space are also fleeing their home countries for brighter horizons. As BTCManager reported in November 2018, India boasted one of the densest developer populations in the world, second only to the United States.
Unfortunately, the growing contention between the Indian government and the local crypto industry has forced this massive demographic out. Developer departure is also the best case scenario. In another May 2019 announcement, Coinome was forced to completely shut down following increasing regulatory pressure. Coindelta, another Indian exchange, met the same fate just two months earlier after citing banking issues.
Although the technology that underpins cryptocurrencies is for the most part uncensorable, moving between fiat and crypto is still easy prey for crypto regulators. Onboarding new users and off-loading into fiat means that a banking entity will need to be involved. As evidenced by Coinome, Coindelta, and one of the larger exchanges in their prime, ZebPay, this has been the choke point through which regulators are blocking the industry.
The Irony of Leapfrogging
A common theme in developing countries is that instead of competing with much richer ones, they might way a tech cycle and then skip ahead. This is particularly true in India, where the distribution of mobile phones is higher than the number of people with functional sanitation.
What’s more, there is now a service for individuals living in regions without electricity that comes to pick up dead phones, brings them to the nearest power station and then returns them fully-charged.
It is for this obsession with the fast pace of technology that ZebPay’s CEO Ajeet Khurana told BTCManager in an interview that “Indians have nothing to worry about, they just need to be patient.” Despite having to flee the country to open shop in Singapore and Australia, Khurana is still bullish on India becoming a crypto-friendly nation. In the meantime, businesses will need to get flexible.
“There are three things that will happen to crypto businesses facing these kinds of regulatory pressures,” Khurana said. “They will either shut down, as we’ve seen, get bought out or buy new services via acquisitions, or, thirdly, they will pivot and become a completely new business.”
ZebPay has already changed its business model, and Khurana admits that he and his team are always on the lookout for some variety of competitive partnership. When they began five years ago, the business was a mere wallet rather than anything like an exchange. Eight months following their launch, they then pivoted to better service the onboarding process of Indian citizens and quickly shot up to one of the most popular exchanges in the country.
Now, the exchange has left the country and is eagerly looking for new ways to regain its footing in the space. With a massive KYC-compliant user base and an openness for new ventures, Khurana is confident that ZebPay will likely join the top ranks some day very soon.