Friday, Dec 29, 2023

India's crypto move, top 10 narrative moving events of 2023

"Be at war with your vices, at peace with your neighbors, and let every new year find you a better man." – Benjamin Franklin ||

Hello everyone! This is the last premium daily of 2023, and I’m finding it hard to believe that this arbitrary and yet satisfying end to a tumultuous year is finally here.

It doesn’t feel right to say I’m excited about 2024 when there is so much uncertainty out there, much of it terrifying, for so many people. From the bottom of my heart, I hope all those living in war zones today will find clearer skies as the months unfold. Meanwhile, I wish success to all those building, perseverance to all those battling, and patience to all those trying to figure out what lies ahead. ❤

You’re reading the daily premium Crypto is Macro Now newsletter, where I look at the growing overlap between the crypto and macro landscapes. There’s also usually some market commentary, but NOTHING I say is investment advice. For full disclosure, I have held the same long positions in BTC and ETH for years, and have no intention to either buy more or sell in the near future.

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Programming note: This newsletter will take a break for New Year’s Day, back in your inboxes on Tuesday! I will be publishing the usual free weekly version tomorrow.

IN THIS NEWSLETTER:

• India’s crypto move

• Top 10 crypto narrative-moving events of 2023

• Key figures

WHAT I’M WATCHING:

India move

Yesterday, I wrote about moves in Nigeria and Turkey that suggest incoming crypto regulation, and I concluded by saying that we should watch India next.

Well, later in the day reports emerged that the government of India had issued “compliance show cause notices” to nine offshore crypto exchanges, including Binance, Kraken, Bitstamp and others. A compliance show cause notice is usually an early step in legal proceedings, informing entities of compliance failings and requesting a response.

The government has also asked the Ministry of Information and Broadcasting to block the URLs of the non-compliant platforms.

This is not a ban on crypto in India. Rather, it seems more like a step toward a regulatory framework in one of the world’s largest economies. According to Chainalysis’ 2023 Global Adoption Index, India ranks first in crypto adoption.

For now, the move is only against “offshore” crypto exchanges used by Indian traders to avoid the 1% source-deducted tax on crypto asset sales. Imposed in 2022, this can be claimed back in fiscal year-end tax declarations, but meanwhile ties up significant capital for active traders. According to Bloomberg, local estimates suggested that 95% of Indian trading volume had moved offshore as a result.

Crypto exchanges that have registered with the Finance Ministry’s Financial Intelligence Unit can continue to operate as normal, and will most likely benefit from the move as business flows back “onshore”. CoinDesk reported yesterday that the number of registered crypto businesses is now up to 31. We could see some of the large international exchanges join the list (domicile in India is not a requirement) so as not to lose India-based customers.

Also, India had made getting global agreement on the need for a comprehensive approach to crypto one of the key goals of its recent G20 presidency, despite not having one in place itself. At the time, a government representative said that India would be reconsidering its stance on crypto rules “in the coming months”. However, in an interview earlier this month at India Blockchain Week, Jayant Sinha, Chair of India’s Parliamentary Standing Committee on Finance, told CoinDesk that any movement on this could be 12-18 months away.

This morning I chatted to Sharan Nair, co-founder of India-based crypto data platform PYOR, who believes that India will wait for global regulations before getting serious about drawing up a comprehensive framework. That could be a long wait.  

Sharan also believes that this latest move is good for India’s crypto ecosystem, and not just because some trade volume is likely to flow back to local businesses. As recently as a year ago, there was genuine concern that India would attempt to ban crypto trading. Now, that seems to be off the table.

What’s more, the slow march toward an official framework highlights the medium-term upside. India’s market is potentially huge. With regulatory clarity, it could see traditional financial institutions start to get involved, more crypto funds emerge, and a greater portion of India’s 1.4 billion people get curious about crypto asset diversification.

Top 10 crypto events of 2023:

All years in crypto are eventful, but history will regard 2024 as an inflection point, not just in terms of market moves but also in terms of global regulatory acceptance, institutional adoption and technological development.

For fun, I set myself the task of choosing 10 events from the endless scroll of fascinating moves that I believe highlight some of the key narrative shifts that will drive 2024. There was so much to choose from, and no doubt you’ll disagree with much of my selection and be irritated that I left certain other news items out. Looking back a month from now, I’ll probably join you in that disagreement. But for now, I’ve gone for developments that have changed the conversation in ways we don’t yet fully appreciate.