Overview of Indian Crypto Platforms and Associated Challenges

The Indian cryptocurrency landscape faces significant challenges due to the inherent pseudonymity of blockchain transactions and lack of comprehensive regulation. A report from the Ministry of Home Affairs highlights the misuse of Indian crypto platforms by cyber criminals, emphasizing the need for regulatory frameworks.

Ownership and Regulatory Concerns

• Many Indian crypto platforms are owned by foreign holding companies, often for ease of raising capital and due to regulatory uncertainties.
• Concerns about tax implications and the need for layered operations due to the ban in 2018, which left platforms without bank accounts in India.
• A few platforms' reluctance to pay the mandated 18% GST has strained relationships with the government.

Notable Incidents and Government Action

• The Directorate General of GST Intelligence (DGGI) investigated several platforms for GST evasion, recovering significant amounts in dues, interest, and penalties.
• Foreign platforms providing services to Indian users were brought under the GST regime in July.

Major Crypto Platforms and Incidents

1. CoinDCX

• Legal Name: Neblio Technologies Private Limited, affiliated with Primestack Pte Ltd, Singapore.
• Revenue: Rs 572 crore in 2024-25.
• Faced a significant hack resulting in Rs 384 crore siphoned, prompting forensic investigations and collaborations for asset recovery.

2. WazirX

• Legal Name: Zanmai Labs Pvt Ltd, 99% owned by Zettai Pte Ltd, Singapore.
• Revenue: Rs 50 crore in 2023-24.
• Criticized for freezing user funds post-hack and proposing loss socialization, leading to regulatory scrutiny and court rulings.

3. Giottus

• Legal Name: Giottus Technologies Private Limited.
• Revenue: Rs 13 crore in 2024-25.
• Faced and resolved GST evasion issues; ruled not guilty of service deficiency in a consumer court case.

4. ZebPay

• Legal Name: Awlencan Innovations India Limited, 99.98% owned by Ohana Dao Pte. Ltd, Singapore.
• Revenue: Rs 52 crore in 2024-25.
• Investigated for GST evasion and faced consumer complaints regarding transparency and service issues.

5. Mudrex

• Legal Name: RPFAS Technologies Pvt Ltd, 99.99% owned by Mudrex Inc, Delaware.
• Revenue: Rs 398 crore in 2024-25.
• Faced backlash for temporary suspension of crypto withdrawals for compliance upgrades.

6. CoinSwitch X

• Legal Name: Nextgendev Solutions Pvt ltd, 99.99% owned by Bitkuber Investments Pvt Ltd.
• Revenue: Rs 74 crore in 2024-25.
• Investigated for GST evasion, recovering Rs 19.38 crore.

Remaining Platforms

• Platforms like Carret, Inocyx, Eclipton, Onramp, CoinDhan, and Pi42 also operate in the Indian market, with varying degrees of reported issues and regulatory scrutiny.

Conclusion

The Indian cryptocurrency sector remains in a complex regulatory and operational landscape, with ongoing scrutiny and challenges concerning compliance, security, and user trust. Effective regulation and transparent operations are essential to mitigate misuse and enhance the sector's stability and growth.