Two Months to WazirX Hack: Why Crypto is a Hush Hush Affair in India

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As a seasoned analyst with years of experience navigating the complex world of finance and technology, I have witnessed firsthand the dynamic evolution of the digital asset landscape globally. The WazirX hack saga has been an eye-opener, not just for its staggering financial implications but also for the stark contrast it presents between India’s burgeoning crypto adoption and the regulatory ambiguity that surrounds it.

On September 18th, it’s been two months since the WazirX cryptocurrency exchange was hacked, causing over Rs 2000 crore worth of Indian users’ crypto assets to be stolen. Now, the exchange has ceased its operations, with the remaining funds of users being put on hold. They have proposed a moratorium in Singapore, which means every Indian user will experience a loss of approximately 43-45% of their funds.

Over the last two months, users have been voicing their discontent towards WazirX leadership, who have steadfastly denied any accountability for the missing user assets. Furthermore, there’s been a call for authorities to launch an investigation into the management, particularly co-founder Nischal Shetty, with suspicion that the breach might be internally orchestrated.

As a crypto investor, it seems that the aftermath of the WazirX hack incident is being downplayed by the Indian government and relevant authorities, giving an impression that this event never transpired or affected any victims in India. To my dismay, no enforcement or investigative agencies within India have taken any noticeable interest in this matter, neither have they shown efforts to recover our stolen funds nor bring those responsible to justice.

The frustrating long wait for Indian WazirX users to get back their funds is a comment on the Indian crypto landscape that is thriving and suffering at the same time.

A study titled “The 2024 Global Adoption Index” by Chainanalysis, which was just released, demonstrates that India has maintained its position as a global frontrunner in the cryptocurrency sector for two years running.

Regulatory Uncertainty Towards Cryptocurrency In India

As a researcher delving into the world of digital currencies, I’ve observed India’s firm stance on cryptocurrencies since 2018. That year, the Reserve Bank of India (RBI) enforced a ban on banks offering services to crypto-related businesses, causing a stir among platforms like WazirX and Coin DCX, as banking services are essential for any cryptocurrency exchange.

2024 saw the trend persist, with Binance, the largest global cryptocurrency exchange, facing a fine amounting to approximately ₹18 crores, and KuCoin incurring a penalty of over ₹34 Lakhs. This data suggests that the specter of regulatory scrutiny lingers not only over crypto businesses but also crypto investors in India, thus hindering the integration of cryptocurrency into mainstream financial systems.

India’s Government Apathy and Myth about Crypto 

One factor contributing to the veil of secrecy around cryptocurrencies in India is the lack of regulation and interest from the government regarding these digital currencies. To the Indian authorities, cryptocurrency serves as a basis for stringent taxation with no apparent benefits reciprocated to its enthusiasts.

There’s a common misbelief among many Indians that cryptocurrencies are mainly utilized for illicit activities or by individuals with hidden funds (black money). This perspective stems from insufficient understanding and knowledge about cryptocurrencies and their practical applications in India.

Just like a coin has both heads and tails, cryptocurrencies have their pros and cons. Gradually, individuals in India are starting to see the potential of this field and the benefits that may arise from it.

The Future Roadmap of India’s Crypto Adoption

Regarding the hurdles, it’s anticipated that the road for cryptocurrency acceptance in India will be bright. It’s plausible that the Indian government will soon publish a document outlining their views on digital currencies. This paper could offer valuable insights into the regulatory landscape surrounding cryptocurrencies.

The long-awaited crypto policy paper is developed under the consultancy of various agencies, gathering data from numerous crypto investors, legal experts, financial institutes, and crypto exchanges. The policy paper aims to ensure that its policies provide a proper regulatory framework to the industry and also address the concerns regarding the use of crypto assets.

The experts believe that the policy paper will address various issues such as,-how cryptocurrency will be classified whether as securities, commodities, or a new asset class altogether. It could also provide clarity on the protection of users’ funds, taxation, regulatory rules on crypto exchanges, and much more.

Additionally, a crypto policy document might serve as a driving force to transform the public’s viewpoint about cryptocurrencies within India. As soon as a regulatory structure is implemented, this shift will lay the foundation for cryptocurrency to gain widespread acceptance in India, much like the stock market has done.

Conclusion

Despite India potentially leading the world in cryptocurrency adoption, the industry encounters several obstacles on its path to mainstream acceptance. These challenges include regulatory ambiguity, a perceived lack of government interest in cryptocurrencies, and the widespread belief that only individuals with illicit funds are interested in investing in crypto.

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2024-09-18 10:12