The downturn in the crypto market globally has put the Indian web3 industry on edge, with firms taking a cautious approach to hiring. While crypto exchanges in the country maintain that they will not be firing staff, like US-based crypto exchange Coinbase, at least four senior executives said that the industry is taking a second look at their hiring plans for the year.
According to executives, crypto firms hold a large part of their treasury in cryptocurrencies, which have reduced in value due to the market’s downturn. In addition, venture investment driven companies will have to consider their runways amid the downturn.
Further, top crypto exchanges in India used to earn millions of dollars in revenues due to high trading volumes, which have dropped amid new tax rules from the government. In April, a report from crypto research firm Credit Rating for Exchanges, Blockchains and Coin Offerings (CREBACO), noted that trading volumes in the country had dropped by over 40% after the government introduced a 30% tax on virtual digital assets.
This drop was further increased by the overall market downturn over the past two months. As Bitcoin, Ether and other big cryptocurrencies hit lows, data from crypto tracking firm Coinmarketcap, shows that 24 hour trading volumes on two of India’s biggest exchanges, WazirX and CoinDCX, were down by 41.96% and 26.22%, respectively.
While Coinbase’s firing of 18% of their staff earlier this week was a direct result of the crypto market’s downturn, Indian exchanges are also foreseeing a second headache in the fact that a 1% tax deduction at source (TDS) is to be levied on crypto transactions from July 1, which could reduce volumes even more.
“Indian exchanges don’t have thousands of employees like Coinbase at the moment, and they’re also driven mostly by venture funds, which gives them a chance to weather the storm right now,” said the founder of one of the leading crypto exchanges in India. “That said, companies with between 500-1000 employees could be in trouble if trading volumes drop from next month,” he said.
Further, Sidharth Sogani, founder and chief executive of CREBACO, a crypto research firm, said that a lot of Indian exchanges are also laying off staff. “They have stopped hiring and they are not doing any expenditure on marketing or advertising,” he added.
Sogani, however, added that this is not a negative moment for the industry. He said that firms are “trying to survive the crypto winder and recession” and laying off is a sign that a company is confident about what it is doing. “Any marketing or advertising in India is not going to be lucrative as customers are not going to invest right now,” he added.
In separate statements, WazirX, CoinDCX and CoinSwitch Kuber all reaffirmed that they arne’t looking to lay off staff. In fact, WazirX and CoinDCX, respectively said, that they are hiring and “bullish on hiring” this year. WazirX has a workforce of over 250, while CoinDCX has 500 people employed in India.
"As an organization, we have always been frugal — even when we made big, bold bets. We have been cautious in every step we have taken, be it hiring or in our expenditure. We are a tight ship and we are also very well capitalized. We will continue to put our people first and honor the offers we have made,” said Ashish Singhal, co-founder and CEO of CoinSwitch Kuber, in a statement.
Exchanges aside, the crypto bear market is also being seen as an opportunity by many Indian web3 firms. The founder of a prominent blockchain firm, who requested anonymity, said that salaries for blockchain engineers, skilled in programming languages like RUST and SmartPy, were driven by global firms. As a result, Indian firms had to pay salaries up to $150,000 per year for one engineer, which ate into their runway.
These salaries have started dropping now, allowing them to hire skilled engineers at lower costs. Another founder, based in Delhi, said that this could be especially useful for Indian web3 firms that compete on a global level, since they will now be able to scale faster without worrying about raising new funds frequently.