The Great Crypto-Cop Brain Drain

By | 09/11/2022

Good Evening [%first_name |Dear Reader%],

Welcome to this week’s edition of



I believe what I’chiliad going to do now should be a punishable offence. Simply information technology’s not, so I’k going to practice information technology anyway. I’m going to begin with a cliche.

The more things change, the more they stay the same.

I don’t call back anyone would disagree if I said that crypto is an agent of change. But the ecosystem sometimes throws up some conversations that are


-time acquaintances. Our master topic today is about 1 such fence.

There’south besides a little fleck about crypto substitution Coinbase’s per-user earnings, and a failed Facebook projection.

Allow’s jump right in.

The Indian crypto brain bleed: more headline than reality

When regulations get too shifty or onerous, businesses often relocate to more favourable jurisdictions.

And when they do, they tend to take human talent with them.

Nosotros fifty-fifty have a handy term for it: brain bleed.

And, at least according to Polygon co-founder Sandeep Naliwal, that’southward exactly what’s playing out in the Indian crypto and blockchain space. Polygon is a platform that helps increase the number of transactions that the Ethereum blockchain tin procedure (and arguably

an important ane
, as my colleague Praveen wrote earlier in

The Nutgraf


Naliwal didn’t take prissy things to say about India’due south regulatory surround.

“I want to alive in India and promote the Web3 ecosystem,” Naliwal



, but “overall, the style the regulatory uncertainty is at that place and how big Polygon has become information technology doesn’t make sense for united states or for whatsoever team to expose their protocols to local risks.” Based in Dubai himself, Naliwal also described the resultant crypto-sector brain drain from India equally “absolutely crazy”.

At present, while that may be truthful for a


of the ecosystem, it doesn’t necessarily reflect the full picture, according to conversations I’ve had with manufacture participants.

Just before we go into that, it might exist useful to lay out how I am divvying upward the cake. Get-go, in that location are projects like Polygon that work as a software base for a whole host of applications and operate a token of their own. Then, India-specific businesses similar exchanges that serve the local marketplace. And third, a host of ancillary businesses that provide services ranging from legal to tax consultations.

Co-ordinate to executives who work in the latter 2 categories, the bleed isn’t equally visible as information technology might be for the first bucket.

“Engineers that write Solidity [programming language] code are rare anyway, so they chase more pay. But otherwise, hiring isn’t a big effect,” said the founder of a crypto exchange.

The low availability of tech talent is a trouble betoken that hasn’t been fixed past all the funding that has poured into the segment. Though that hasn’t stopped companies from trying.

“Hiring is the best fashion for startups to use funding. With things similar marketing and business concern development, there are still short-term metrics you accept to hitting,” a hiring consultant who has worked with crypto businesses told me. With hiring, those metrics are more long-term and harder to quantify.

For the third category—ancillary businesses—the rules are territory-specific, which means there is always a local flavour to these services. For instance, Bharat’s recently appear taxation authorities for crypto-assets isn’t likely to boost business in regulation-arbitrage destinations. But it


create more need for lawyers and accountants familiar with operating in India.

And while some destinations like the United Arab Emirates (UAE) or Singapore may seem more appealing to businesses that aren’t as well nifty on dealing with Indian regulation, the brain drain is more than limited to the tech side of things. Non an overarching crypto miracle.

Having said that, we have to retrieve that the idea of tech brain drain isn’t exclusive to crypto either. A conversation about it surfaces each time a major global corporation appoints an Indian-origin senior executive. Which, most recently, was what happened when Twitter appointed Parag Agrawal as its master executive. But that problem, too, might be a lilliputian overstated.

“Looking at absolute numbers is misleading. When looked at as a proportion of its population, Republic of india has one of the lowest emigration rates in the world,” Amee Misra, a senior economist at the UN Development Plan in New Delhi,



So, while Polygon may feel that Republic of india is missing out on a lot past having slow-moving regulations that proceed flipping around, I’d argue that’s more of a business pain point. Non the showtime of a significant flight of man capital.

With that, let’s turn to another things that happened in crypto over the final few days.

Crispy Bytes

  • A proposal that would have finer banned crypto mining and transactions in Europe failed to get enough votes in a Eu parliamentary committee. [
    Al Jazeera

  • Crypto exchange Binance is eyeing a spate of mergers and acquisitions to expand its presence in traditional financial markets. [
    Financial Times]

  • Japan has urged crypto exchanges to act in line with sanctions levied on Russia following its invasion of Ukraine. [

  • The Indian income tax department is preparing to issue notices to 700 entities who take been fugitive taxes on high-value crypto transactions. [
    The Economical Times

  • Big names in the mainstream hedge fund globe are pouring billions of dollars into crypto investments. The funds include ones run by veteran traders like Alan Howard and Paul Tudor Jones. [
    The Wall Street Journal

  • Venture majuscule giant Andreessen Horowitz has hired Michele Corver, formerly chief digital assets advisor at the Financial Crimes Enforcement Network (FinCEN), as caput of the VC firm’due south regulatory segmentation. [

Deeper Dives

It was in 2017 that Facebook began thinking about a digital currency of its own. Fast forrard five years and the projection is dead and avails related to it have been sold to Signature Bank. Even though Facebook onboarded multiple large firms and made a big splash about its cryptocurrency ambitions, the project apparently died considering it came through the wrong messenger.

Or, as one political leader told

Financial Times

, “Diem spent years trying to opposite engineer their projection to fix all of its faults. Just they could never ready existence linked to Facebook. It was their original sin.” [

What defenseless my eye this week

Through 2021, crypto exchange Coinbase fabricated an average of US$64 in transaction revenue from each user. Which seems pretty elevated if we wait at how much transaction revenue Charles Schwab, one of the earth’south largest brokerage firms, rakes in from its 33.4 million accounts.

During the same twelvemonth, Charles Schwab earned a full of US$739 1000000 in transaction revenue. Dorsum of the envelope math would bring its average per account earnings to about US$22—just a third of what Coinbase earns from its 11.four meg monthly transacting users.

That’south all for this calendar week’south edition. If you lot take whatever overarching thoughts (or even nitpicky ones) about this newsletter, please practice write to me at

[email protected]

I’ll see yous over again next week. Accept care!


Jaspreet Kalra