From Black Swans To Bright Horizons: Ahead Of G20, A Look At How India Can Unpack Crypto's Resilience & Potential

OPINION: For longer-term clarity, regulations stand as a pivotal force in shaping emerging sectors, including blockchain and crypto.

By Parth Chaturvedi

In recent years, we have witnessed a digital global phenomenon as blockchain technology, Web3, and crypto capturing the attention and participation of investors, institutions, and governments worldwide. While some black swan events in the past gave rise to uncertainties and hit the sentiment at large toward the ecosystem, the long arc continues to look promising.

The current market phase has undoubtedly slowed down the sector’s growth, but the industry continues to push forward, both globally and within India. This resilience is evident through surveys indicating rising crypto adoption rates, major corporations and governmental bodies exploring blockchain's utility, and calls for a progressive global regulatory framework such as those being discussed in the G20 forum.

State Of Web3, Crypto In India & The World

A recent study by Consensys reveals that 20 per cent of Indians own some form of crypto, with 57 per cent considering entry into the crypto market within the following year. These figures, magnified by India's status as the world's most populous nation, are enough to keep the country amongst the list of leading nations witnessing substantial investor growth and widespread adoption of blockchain and crypto.

From an institutional perspective, blockchain integration continues across government departments and the private sector. Instances like the West Bengal government's collaboration with Web3 firm Airchains for blockchain-based land ownership and Reliance's intent to explore blockchain platforms underscore the value this technology holds. 

Even globally, notable brands like Nike, Reddit, and Starbucks are embracing NFTs, while financial giants like PayPal are launching their stablecoins. The year's pivotal moment for institutional adoption arrived with BlackRock, the world's largest asset manager, applying for a spot Bitcoin ETF.

The adoption of blockchain technology invariantly furthers the growth of the entire ecosystem, including the emergence of crypto as an asset class.  

Crypto’s Ongoing Woes

In terms of price action, there’s no denying that the metaphorical bear continues to grip the crypto market. The current prices are far lower than 2021, but the industry, globally, has suffered an onslaught of various issues to get here, including the macro shift away from “risk-on” assets with increasing interest rates, a series of defaults by centralised players triggered after the Terra/Luna crash, and even repeated enforcement action lawsuits by the US SEC.

However, there’s light at the end of the tunnel, as we will be entering a unique period next year. With deadlines for spot BTC ETF approvals by early 2024, we will witness institutional demand meeting Bitcoin’s programmed “Supply Halving” which is scheduled for April 2024. If the macro environment shifts to lower interest rates as well, we will have the “perfect mix” for an explosive rally in crypto prices. 

India’s G20 Opportunity

For longer-term clarity, regulations stand as a pivotal force in shaping emerging sectors, including blockchain and crypto. This significance is evident in recent remarks by Prime Minister Narendra Modi at the B20 summit, and past statements by Finance Minister Nirmala Sitharaman, advocating for a global regulatory framework for crypto. 

In fact, it is encouraging to see India’s leadership role in establishing a global framework for crypto assets under its G20 presidency. The ‘presidency note’ released in August is an important high-level input for the IMF-FSB synthesis paper that is to be released during the G20 summit. 

At a global level, certain jurisdictions are already taking the lead in several regulatory developments that are propelling the industry. Some of them include the establishment of EU’s MiCA (Markets in Crypto-Assets Regulation), Dubai’s VARA (Virtual Assets Regulatory Authority), Hong Kong’s approval to provide virtual asset trading services, and even Japan’s stablecoin laws; all these serve as positive steps in the forward direction.

In summary, the path of blockchain technology, Web3, and crypto reflects adaptability and growth. Despite market challenges, global interest underscores the lasting potential of the industry. India's role, marked by adoption and regulatory leadership, exemplifies collaborative efforts for blockchain's sustainability. Anticipating technological progress, clear regulations, and macro shifts, Web 3.0's transformative influence on the digital realm is poised to define the future.

(The author is Investments Lead at CoinSwitch Ventures)

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.