With recent news of a cryptocurrency regulation bill coming up for discussion in the Parliament, there has been a state of panic in the nascent cryptocurrencies industry in India. With cryptocurrencies gaining traction globally, now would be a wrong time to ban it in India, as per Jabong Co Founder Praveen Sinha. “There is a lot to lose but an enormous amount to gain, if cryptocurrencies are regulated and not prohibited in the country, considering it is in vogue and likely going to be around for the many years to come. We can take the example of China, where crypto trading was banned, but today China has the largest mining community in the whole world. Just like the internet, this parallel digital economy has potential to disrupt the way financial markets operate around the world and as one of the largest economies in the world, we cannot afford to miss the ride,” added Praveen Sinha.
The Crypto market in India
India has over a million crypto investors with investments over a billion dollars into crypto assets. While this might seem like a small number, let’s understand that the Supreme Court of India only struck back an RBI order preventing Indian Banks from transacting with Indian crypto exchanges in March, 2020. Since then, the markets have been on a major rise, following global cues as the largest crypto asset, Bitcoin breached the 60,000$ mark recently, from a low of 3800$ in March, 2020. Volumes on Indian exchanges have increased 20 fold over the last 12 months, signalling a rise in interest among investors. WazirX, a reputed Indian exchange boasted volumes of over a billion dollars last month. The exchange’s crypto asset known as the ‘WRX token’ has a market cap of 115 million dollars at the time of writing. Polygon (Matic), another project that has captured the imagination of the crypto community worldwide, now has a valuation of over 2 billion dollars.
The case for empowering the crypto industry
“There are several reasons this industry needs to be supported and positive regulation will go a long way to clear the clouds of uncertainty around investing in crypto”, feels Praveen Sinha Jabong Co Founder. Pointers in favour of this industry include:
- One of the few industries to show 10x growth during COVID. COVID seems to have helped crypto break out of the 3 year bear circle that it was in and kick started a bull run.
- The crypto industry allows Indian developers to compete with the best in the world in a level playing ground because of the easier access to funds. High skilled developers can give wings to their ingenious ideas by raising funds from investors all around the world and grow their own venture without ever selling stakes in the business to large funds.
- Job creation and employment – With newer projects, exchanges, investment funds and other complementary services coming up across the country, there has been a surge in hiring in the crypto and blockchain industry, which is always a big positive for an economy navigating itself through a pandemic.
- A parallel economy to boost the existing one. The crypto economy can co-exist with the traditional markets and boost it as well. Investors can liquidate profits into fiat from crypto and help improve consumption in the economy.
- Embracing the benefits of blockchain – Blockchain and cryptocurrencies have a lot of use cases across a number of industries such as fintech, remittance, supply chain, cloud storage and so on. The decentralisation of several key computing functions via the blockchain helps save costs and resources. Projects like Ripple (XRP) in remittances, Ethereum (ETH) in powering decentralised applications and Chainlink (LINK) in providing on chain oracle services have proven their viability in real world businesses.
Conclusion
A lot of businesses and jobs are hinging in the balance as the Finance Ministry and the industry stakeholders weigh options to define the future of the industry in the country. As one of the largest populations in the world and a top 10 economy, positive regulations would be met with huge cheers and support not only in India but across other crypto positive economies in the world. At the same time, the RBI’s caution about cryptocurrencies cannot be ignored as there have been instances where the anonymity of cryptocurrencies have led to activities on the dark web, money laundering, terror financing etc. This can be solved by enforcing a stricter KYC framework and cooperation between exchanges and authorities. There should be a regulatory body formed on the lines of SEBI to oversee the crypto industry and report back to the RBI. “A well regulated crypto industry in India largely helps the RBI’s case of introducing its own CBDC i.e a Digital INR, which could very well become the de-facto stablecoin for all exchanges in India in the near future, which could go a long in strengthening the overall value of the rupee as well.”, concluded Sinha.
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