Why India needs to adopt crypto

Investment, and not payment, is the most popular use case of crypto assets across the world. But, over the last decade, crypto has become much bigger than the asset class itself. It is the new Internet. Sample this: You go to any stock exchange today to buy 100 stocks. But nobody is selling. So, stock exchanges create market-making schemes to enhance the liquidity of a particular stock. People and companies drive this process through high-frequency trading. While a market maker can dictate the price, an automated market maker— powered by blockchain technology — are algorithms that provide liquidity through transparent pricing. Blockchain technology underlies all cryptocurrencies. Every crypto asset is solving a problem, and the size of the problem primarily drives its value. Cryptocurrencies have evolved from currencies into trillion-dollar technologies that enable people to reap the benefits of the digital economy in a safe, secure, and transparent manner. In November, the global crypto market breached $3 trillion in market capitalisation, with investors, regulators, and policymakers finding viable ways to empower people with this emerging technology. In India (the second-largest nation globally in crypto adoption), a reservoir of talent is already developing for crypto.

In 2016, when the Honourable Prime Minister’s demonetisation move inducted millions of new Indians into the digital financial services industry, globally, cryptocurrencies were evolving from currency to trillion-dollar technology that would revolutionise privacy and redefine the way people use the Internet. Cut to the present: Facebook and Microsoft are investing billions of dollars in building platforms powered by the crypto and the blockchain ecosystem. Blockchain — the technology that enables the existence of cryptocurrencies — validates many different use cases. So far, India has provided an ecosystem to encourage amazing technology leaders like Satya Nadella and Sundar Pichai to run the global tech industry. By leveraging blockchain technology for various sectors, with customer safety at the forefront, we are well-positioned to transform ourselves from being a net importer to a net exporter of technology. Today, India can nurture talent that can run global companies and build them in India for the world. With many crypto enthusiasts less than 28 years of age, the new Internet era provides immense opportunities to the nation that missed out on Internet 1.0.

In India’s efforts to harness technology to enable financial inclusion, the Central government has been progressive in formulating policies that safeguard the interests of the government, regulators, consumers, and society-at-large. We should not miss out on the crypto revolution as we did with the origin of the Internet. While learning from other developed countries like the US, UK, Singapore, and Japan, we will have to create regulations that enable innovation while protecting customers.

A progressive regulatory framework will create a prosperous crypto ecosystem and expand financial inclusion in the country in a secure, simple, and transparent manner. Recent developments, including the Supreme Court lifting the ban on crypto trading in India in 2020 and Bitcoin ETF listing in the US in 2021, have led to further excitement around crypto mainstreaming and brought legitimacy to the industry. Top Indian crypto exchanges are investing heavily in creating awareness about asset-class investing and following strict self-regulatory practices, very similar to what the other regulated financial entities follow, to create a prosperous crypto ecosystem. The regulators should engage industry stakeholders to keep track of the cutting-edge innovation crypto offers, and the regulations will have to evolve as technology finds new dimensions. Customer protection should be at the forefront. The time has come to find ways to collaborate with the other financial institutions in the country’s endeavour to create a digital-first economy.

The author the founder-CEO of CoinSwitch; and co-chair, The Blockchain and Crypto Assets Council