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Venture capital (VC) interest in crypto and blockchain firms in India has risen after a lull caused by regulatory uncertainty. According to data from Delhi-based data intelligence platform VCC Edge, 13 deals worth more than $176.9 million have been completed in 2021, significantly more than the 10 deals worth over $44 million in the previous year.

The latest to benefit from this trend is CoinDCX, which on Tuesday raised $90 million, becoming India’s first crypto unicorn with a valuation of $1.1 billion. The round was led by Facebook co-founder Eduardo Saverin’s B Capital.

CoinDCX’s new funding round accounts for over half of the money spent on crypto firms this year, but industry executives said many more such deals are expected.

Crypto exchanges are expected to raise more money. “We are at the point where we can pick and choose which investors to go with," said an industry executive who has been raising funds for the past few months.

Top crypto exchanges are being courted by big VC firms, while there are many smaller firms looking for seed funding for decentralized applications and crypto-wallets. “The cryptocurrency industry is steaming hot. 2021 has seen an accelerated interest in the crypto space as companies look to gain exposure to the market. A number of sectors floundered in FY21, given the challenges of doing business in a pandemic environment. Fintech, for the most part, was not one of them," said Sharan Nair, chief business officer of Coinswitch Kuber, one of the top exchanges in India. “Crypto market was a hot area of investment during these tough times. VC funds have invested $17 billion (globally) into the industry during the first half of this year, which is the highest of any year so far," he added.

“VC interest was always there, even earlier since the Supreme Court ruling last year," said another senior industry executive.

He noted that the informal notice from the Reserve Bank of India (RBI) to banks earlier this year did affect industry morale for a while, but VC interest continues to rise, albeit with caution. “I think they all know that at some stage, each of these countries can’t ignore it (crypto). If you want to be a digital economy, you have to embrace everything digital while managing the risks,"he added.

Fears of an overarching crypto ban started this year when a bill appeared on the agenda of the Budget session of the Parliament in February. This bill was expected to lay the framework for a central bank digital currency (CBDC) and ban all private cryptocurrencies, though it was never tabled.

Things now seem to be easing on the regulatory front, with many industry experts believing that an overarching ban is unlikely. “There are two parts to the bill. One is creating CBDC, where I don’t see a challenge or controversy. The debate has always been on private crypto and whether they should be allowed to be traded or not," said Navin Surya, advisory board member at the Blockchain and Crypto Assets Council formed by the Internet and Mobile Association of India.

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