Legalising Cryptocurrency in India Will Do More Than Attract Investments, Say Experts
Earlier this week, the cryptocurrency industry of India heaved a sigh of relief as the Supreme Court of India quashed the Reserve Bank of India’s injunction on trading cryptocurrencies in the country. Even as the apex court’s ruling has led to many expecting direct investments to expand in the cryptocurrency space in India, experts believe that the impact that this sector can have goes beyond that.
Speaking to News18, Dr. Garrick Hileman, head of research for Blockchain.com, stated on the matter, “Opening the doors wider for cryptocurrencies won’t only expand their daily use in India, but also bring in new talent and innovation that would otherwise choose a more crypto-friendly country. In the long-term that’s a clear benefit for the Indian economy and its competitiveness globally.”
Hileman believes that this opportunity of creating jobs and inventing new technologies based on existing cryptography and blockchain technologies is largely thanks to the major growth opportunity that cryptocurrencies presently offer. “The ecosystem of users has grown from thousands of pioneers to over 30 million people today — growth that significantly outpaces the early internet’s growth rate (approximately 2x faster). That growth includes the use of cryptocurrencies as a lower cost and more efficient alternative for certain financial transactions, the “digital gold” thesis for bitcoin as the ultimate hard asset, and the emergence of the decentralised finance movement (‘DeFi’) that aims to expand financial inclusion and restore user-control over personal finances,” he adds.
With the ban lifted, we now open ourselves to the possibility of Indian developers building and promoting a similar public blockchain (as bitcoin and ethereum) that will be open for trading.
Nischal Shetty, whose startup WazirX was acquired by global crypto leader Binance in late 2019, expects the industry in India to show similar positive traits beyond renewing the influx of investments in the country. Speaking to News18, he said, “The best part about the SC ruling is that we will finally get to see the emergence of Indian public blockchains which require cryptocurrencies for functioning. With the ban lifted, we now open ourselves to the possibility of Indian developers building and promoting a similar public blockchain (as bitcoin and ethereum) that will be open for trading.”
The advent of such technologies and companies bringing them in can be key to ushering in a new industry that can have tremendous impact on the overall economy, in the long run. Not only does it create jobs, but also puts India on the global map of yet another burgeoning industry that emphasises upon decentralising the epicentre of control for finance.
Hileman further states that India stands at a strong position of growth in developer and executive positions in the cryptocurrency industry, and while the recent SC verdict will support that, much will also depend on what follows next. “We are seeing India develop a strong position in developing next-generation blockchain and distributed ledger technologies. Enhanced regulatory clarity will only help Indian firms develop regional and global leadership positions,” he says.
If regulators’ actions are clearly against or outlaw cryptocurrencies, it clearly slows adoption as businesses aren’t able to serve that market
It is this latter bit that Hileman believes can be crucial to shaping the future of this industry, and shape the direction that it takes. “If regulators overseeing cryptocurrencies are pro-innovation – like the UK’s investment in understanding the ecosystem – adoption can be accelerated. If regulators’ actions are clearly against or outlaw cryptocurrencies, it clearly slows adoption as businesses aren’t able to serve that market,” adds Hileman.
It is this that can eventually be make or break for the nascent crypto industry of India. As G.V. Anand Bhushan, partner and Chennai head of general corporate affairs and Shardul Amarchand Mangaldas & Co. told News18, “There are substantial differences in legislations across the world regarding regulation of cryptocurrencies. It is likely that India may follow the path that Japan did in 2017 with a regulatory framework that governed registration of exchanges, establishment of security procedures, independent audits, mandatory disclosures to customers, maintenance of records and submission of accounts annually to their financial services agency.”
Whichever way things go, the next few months will offer telling guidance towards how India approaches cryptocurrency, and what impact it has on the nation’s economy.