Investment in cryptocurrency start-ups shrank by 75 per cent in 2022 as unfavourable Indian regulations dampened market sentiments.
According to Traxcn, a global start-up data platform, investments in cryptocurrency platforms and exchanges dwindled to $176.2 million in 2022 from $440.6 million in 2021.
|Year||Investments in crypto startups|
Globally, 2022 has not been a good year for cryptocurrency as VC funding decreased for the past three quarters.
While global events will have implications on the Indian ecosystem for cryptocurrencies, the government’s dislike for cryptocurrencies has also cooled off VC and investor sentiments, according to experts.
Crypto-laws such as a 30 per cent tax and one per cent TDS introduce in the first half of 2022, significantly dampened sentiment amongst investors and traders alike.
Shifting India operations
Top Indian exchanges are shifting operations from India, and there is uncertainty in the long-term outlook. However, the liquidity crunch in the start-up ecosystem overall has also contributed to a decrease in funding in the Indian crypto space.
Rajagopal Menon, Vice President at WazirX said, “Cryptocurrencies are some of the riskiest investments in tech. And the overall slowdown in VC funding for tech is going to impact cryptocurrency start-ups as well. Tech stocks have declined globally, therefore it makes sense that cryptocurrencies are going to be affected by the volatility. But I am sure that the market will recover.”
Menon added that now is the time for the Indian crypto industry to put its head down and build the future.