Dear Reader,
How did you come to know about ether, bitcoin or cryptocurrencies in general?
Was it because the likes of Kim Kardashian, Elon Musk and Tanmay Bhat pushed and promoted them?
In the West, social media influencers Kim Kardashian, the D’Amelio family, Tana Mongeau and Loren Ray have been roped in to promote various cryptos and exchanges. Indian exchanges are not lagging either and showcasing influencers to get more eyeballs.
The celeb list is long. From popular comedians Tanmay Bhat and Rahul Subramanian to cricketers Ishant Sharma and Dinesh Karthik and illustrious actors Manoj Bajpayee, Radhika Madan, Kriti Kharbanda and Radhika Apte and many more appear for leading Indian crypto exchanges such as CoinSwitch Kuber, Binance-owned WazirX and CoinDCX.
But do they mention the risks associated with crypto when campaigning for these virtual currencies?
Of course not.
But that does not mean a complete absence of legal backlash against unbridled promotion.
In July this year, lawyers Vikas Kumar and Ayush Shukla filed a petition in the Delhi High Court, seeking the issuance of guidelines that should be adopted by Indian crypto exchanges. (Until now, they have been advertising their products without standard disclaimers.)
The court has already issued notice to all respondents, including the crypto exchanges (WazirX, CoinDCX and CoinSwitch Kuber), Securities and Exchange Board of India (SEBI) and the Ministry of Information and Broadcasting, and the next hearing will be on August 31, a couple of days from now.
Such legal intervention should not surprise anyone. One would come across bucketloads of investment disclaimers regarding mutual fund products and stock market trading. But when it comes to crypto assets that are inherently more volatile, more vulnerable to the law of supply and demand and involve more technicalities than traditional financial products, the much-needed risk warnings are missing. There should be appropriate advertisement-related guidelines that crypto companies must adhere to, Shukla told Inc42.
Meanwhile, social media influencers continue to impact the crypto market and we continue to witness market upheavals.
Consider how the tweets from Elon Musk and the American rapper Snoop Dogg drove the market value of dogecoin past $10 Bn at the cost of the crypto poster boy bitcoin. Commenting on the incident, billionaire and leading crypto investor Tim Draper earlier today Inc42, “An Elon Musk message can shake a market for the short term, but the fundamentals are going to win out in the long run. People have a better currency in bitcoin. It is dawning on people that this is the beginning of a new age.”
If people become aware that a new asset class has come in this new age and do their homework before investing, there is not much chance of taking a blind leap of faith. In that case, influencers on social platforms will remain what they are — awareness builders and product promoters, but not the makers and breakers of the crypto world or investors’ fortune.
Announcing The Crypto Summit 2021
As the crypto market witnesses never-before changes, thanks to the evolution of DeFi, NFT and other sub-verticals, the market share of bitcoin, the crypto world’s poster boy, is sharply falling. It has dipped to 46% in August from 67% in January this year. Like many other crypto enthusiasts across the globe, we are curious to know what the future holds and think this is the right time to capture the trends that will brew a heady mix and change the extant financial system.
We are, therefore, excited to announce The Crypto Summit 2021, India’s largest crypto and blockchain event, an initiative by Inc42 Plus and CoinSwitch Kuber. The summit aims to foster crypto development and its future, focus on the leaders and the developers in the crypto space, and play a significant role as it ushers in Web 3.0.
Scheduled for September 18-19, 2021, The Crypto Summit will bring together 1,000+ founders, industry leaders and makers/developers working at the intersection of technology, investment and regulation to get everyone on the same page and build an inclusive, financially decentralised India.
Tweet Of The Week
In this tweet thread, Balaji Srinivasan, the former CTO of Coinbase and an angel investor, underlines how crypto has evolved as a robust challenger, taking on the long-established setups of the West and China.
For Binge Reading
How The Coinbase Mafia Flipped The Crypto Startup Ecosystem: The Wilmington-headquartered company (located in Delaware) leads crypto-based innovations and has invested in 150+ crypto startups in just three years. But unlike other entrepreneurs-turned-investors with separate funding channels, Coinbase entirely depends on its balance sheet for investments. It focusses on seed rounds, and the ticket size varies between $50,000 and $250,000. Read the story here for a deep dive into the company.
Crypto Crackdown In The US: The crypto tax provision in the US infrastructure Bill is not the only worrying issue for crypto stakeholders in the US. The country’s federal regulators are also taking crypto startups to court, accusing the latter of violating rules. In the last one month, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department have imposed more than $120 Mn in penalties on crypto exchanges and startups. Politico takes a look at this massive crackdown.
Crypto This Week | News Doing The Rounds
SEBI Allows Blockchain Usage For Security, Covenant Monitoring
Based on a working group’s recommendations, Indian capital markets regulator SEBI has allowed depositories to develop a blockchain-based security and covenant monitoring system. The platform will be used to record and monitor security creation and also to monitor covenants of non-convertible securities. The new system is expected to be operational from April 1, 2022.
India’s Polygon Acquires Hermez Network For $250 Mn
Ethereum-based Layer-2 platform Polygon (previously Matic) acquired Hermez Network, a zero-knowledge (ZK) ethereum rollup, for approximately $250 Mn. Now the technology, solutions and HEZ tokens of Hermez will be merged with Polygon, and the company will operate as Polygon Hermez under Polygon’s suite of solutions. Polygon has been developing ZK proofs for many months and has committed $1 Bn, a significant portion of its treasury, to ZK-related efforts. Its acquisition of Hermez was part of this strategic initiative, and the token merger (between Polygon’s MATIC and Hermez’s HEZ) happened for the first time, the company claimed.
Cabinet Note On Cryptocurrency Bill Is Ready: FM Sitharaman
Speaking on crypto legislation, finance minister Nirmala Sitharaman has said that the Cabinet Note on the Cryptocurrency Bill is ready, but it is still awaiting the Cabinet’s approval. Sitharaman has also given the assurance that the government is looking into how crypto may help fintech.
Crypto Scammers Held In Bengaluru
The Bengaluru police arrested two people identified as Piyushbhai Himmatlal Soni and Rajeshbhai Dhirajlal Soni for allegedly cheating a businessman of INR 3.5 Cr by luring him to invest in crypto. According to the police, the prime accused in the case is still absconding.
NFTs In India May Attract Double Taxation
The Indian government may impose a 2% equalisation levy on any purchase of a non-fungible token or NFT, besides charging goods and services tax (GST) on the same, according to media reports. Such taxation is usually applicable to overseas companies operating in the Indian market.
The NFT market in India is still in its nascent stage and requires both regulatory and financial support, especially when it comes to crypto startups and art galleries looking to deal in digital assets. Will double taxation kill the industry even before the takeoff? What do you think? Better still, let us know what you think about our crypto-economy newsletter by replying back to this mail!
Till next week,
Suprita Anupam
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