Crypto is often called the "Internet of Value" and for good reason. It's upending industries worldwide, offering a fresh financial architecture, propelling a digital media revolution, and much more. But what does this mean for India?
Let's take a deep dive into India's journey in crypto and explore its significance and current status. Furthermore, let us try and read the tea leaves to see how crypto’s future may unfold in the country.
Here’s Why Crypto Could Prove Important To India
Remittances: A Game Changer
India holds the global top spot for remittance receipts, raking in approximately $80 billion annually. The traditional remittance process is not only costly — banks and currency exchanges levy fees up to 10 per cent — but also slow, taking between five to 10 days. Crypto disrupts this paradigm, enabling instantaneous transfers at a fraction of the cost. India could save an astonishing $8 billion annually while expediting the flow of funds as swiftly as email.
Capital Investment: The New Gold Rush
Crypto is currently experiencing a significant influx of venture capital (VC) investment on a global scale. According to Galaxy Digital Research, VC investments in crypto startups exceeded $10 billion in Q1 2022 alone. Extrapolating this, the annual figure could reach $40-50 billion. With the right policy environment, Indian entrepreneurs in cities like Mumbai, Bengaluru, and Delhi have the potential to give birth to the next generation of crypto unicorns.
The Gig Economy And Creator Revolution
The COVID-19 pandemic has demonstrated that remote work is not only feasible but highly productive. With the advent of affordable smartphones and data plans, India is churning out digital content at an unprecedented rate. Leveraging Web 3.0 technologies, Indian creators have a golden opportunity to monetise their skills like never before, appealing to both domestic and international audiences.
Decentralised Finance (DeFi): The Inclusive Alternative
Contrast traditional Centralised Finance (CeFi) with its decentralised counterpart (DeFi), and the benefits of the latter become clear: transparency, fairness, inclusivity, and cost-efficiency. In a nation like India, where a significant portion of the population is underbanked, DeFi offers transformative solutions in lending, insurance, and brokerage services.
National Security: The Decentralised Shield
Recent years have illustrated that even heads of state can be de-platformed — recall Donald Trump's Twitter ban — as can entire nations, as happened with Russia's removal from SWIFT. Crypto and decentralised technologies are not merely optional but vital to safeguarding India's national sovereignty.
Social Impact Via JAM (Jandhan, Aadhaar, Mudra)
Government initiatives targeted at marginalised communities could greatly benefit from incorporating Crypto. Smart contracts could minimise leakages and ensure funds reach their intended destinations. Micro-finance schemes can be deployed swiftly and fine-tuned for maximum impact. The private sector can contribute by developing open-source software to make these programmes more effective.
What Is Happening On The Ground?
Enterprise Adoption
A consortium of 15 leading banks, including private giants like HDFC, ICICI, and public sector banks like the State Bank of India, have formed the Indian Banks' Blockchain Infrastructure Company Private Limited (IBBIC). Their aim is to modernise procedures like Letters of Credit (LCs), GST invoices, and e-way bills using blockchain technology.
Government Initiatives
Pilot projects are ongoing in sectors such as land registration and healthcare. For instance, the Telangana government is working to digitise land records through blockchain. Similarly, the Maharashtra Government is issuing COVID-19 test certificates using blockchain technology.
RBI Moves
The Reserve Bank of India (RBI) has initiated a Central Bank Digital Currency (CBDC) pilot project, with its Wholesale and Retail Digiral Rupee, or e₹.
What Is India's Stance On Crypto Regulation?
India's approach to crypto regulation is one of caution. While it has yet to establish a comprehensive regulatory framework, it has taken preliminary steps to bring crypto under existing laws.
In its 2022 budget, the finance minister announced TDS on crypto sales and that profits derived from crypto transactions are subject to a 30 per cent tax.
In 2023, cryptos have been brought under the ambit of the Prevention of Money Laundering Act (PMLA). This requires stakeholders to report transactions to the Financial Intelligence Unit (FIU), thereby adding an additional layer of financial scrutiny. These developments indicate that India is taking baby steps towards regulation.
India's crypto journey is not just promising but transformative. The nation's unique amalgamation of technological adoption and its aim to become a $5-billion economy make it fertile soil for this digital revolution. With regulatory scaffolding incrementally taking shape and enterprise-level adoption on the rise, India stands on the precipice of a groundbreaking era where Crypto could very well become the game changer in its digital revolution.
(The author is the Vice President of crypto investment platform WazirX)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.