After having played second fiddle throughout much of the early IT boom, India has proven it has the capacity and resources to be at the forefront of the next digital transition. Regulating crypto assets – and blockchain technology in general – is an inevitable step, according to industry analysts.
Time for Centre to Adopt a Proactive Stance on Cryptocurrencies
For a long time, the Indian crypto market has been characterized by legal uncertainty and patchwork solutions. Industry analysts and digital technology experts remind often – as they do in a recent op-ed piece on crypto policy reform – that the Union economy stands to lose a lot if it does not regulate, stimulate (and eventually tax) new-age digital financial assets.
The potential that the underlying blockchain technology offers to desi startups and the entire IT ecosystem has been proven across multiple use cases. Digital industry applications range from network stability to transaction security, from public record reliability to potent crowdsourcing applications.
More importantly, any reputable trading exchange, cricket betting platforms like 10Cric or online casino in India is more than ready to accept and make the best use of crypto-assets and their growing value.
Interestingly enough, the above report cites a donation by Ethereum founder worth $ 1 billion for Covid relief in India, while authorities and mainstream media still do not know what to make of such a gesture.
The fact that most lawmakers and government representatives do not know how to use and invest crypto assets reveals a growing gap between the importance of modern digital finances and their appreciation in New Delhi. Starting with a fraction of a cent in 2008, crypto markets today amount to more than $ 2.5 trillion in total value and they have shown their reliability and stable growth potential especially in the face of last year’s pandemic scenario – growing nearly five-fold since Covid-19 hit the planet.
Without a clear regulatory framework, the Indian digital economy stands to lose significant opportunities and spillover effects, falling again behind the global IT train.
Big Urban Communities Follow Crypto Trends More Closely
Industry research into online gaming and entertainment habits reveals that – quite unsurprisingly – overall levels of social and economic development drive entertainment spending across India. Disposable income in and around the major urban agglomerations pushes them up the rankings of innovative online recreation and digital spending.
Most young urban crypto investors have always held the belief that sooner or later the Reserve Bank of India (RBI) would loosen up its stance on decentralized digital assets. For a long time, the regulator’s informal position went against a Supreme Court decision from 2020 which struck down its circular to commercial banks and other intermediaries. The RBI had earlier instructed them to steer clear of crypto deals and never publicly withdrew its position until the end of May 2021.
China Crypto Policy, not an Example to Follow
Chinese fintech giants have largely paved the way for Asian startups in the field. In many market segments, they have been dominant even on a global scale when it comes to novel solutions in digital finances. China has also invested heavily in its southern neighbor – from Paytm to Zomato – before relations turned sour in the Summer of 2020 and it started gradually scaling down.
But for all its innovative capacity, the Chinese authorities have fallen short of appreciating the decentralization of cryptocurrencies as a driving force for market growth and global stability in demand. The launching of a digital Yuan leaves experts perplexed, as it tries to bring under Government control a type of asset which is inherently different.
Emboldened by the success of its UPI platform, India has been drawing more investments in fintech than China, at least for the past few months. But whether RBI’s attempt to follow suit with a digital Rupee would end up being a success is rather questionable.
Blockchain investors have one hope – that legislators and banking regulators would produce a meaningful form of regulation for crypto assets and digital markets. Without some certainty in the segment, investors and consumers might lose patience and faith in India’s ability to capitalize on blockchain’s potential.