How a ban on cryptocurrencies may push back financial inclusion goal

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Bitcoin, and cryptocurrencies in general, have come a long way since their inception in 2009, from being just a buzz word among tech lovers to becoming a quintessential crisis asset for safeguarding investments. The growing mainstream adoption of blockchain enabled cryptocurrencies have had a tremendous positive effect on prices as well as its use cases. Tesla, Facebook, Paypal, Visa, Mastercard and Wall Street stalwarts like JP Morgan have either invested or already started building technologies to drive the next wave of crypto adoption.

Cryptocurrencies in their current state are like the dial up connections we had a couple of decades back in India, but they hold immense potential to disrupt every single industry, just like how Internet evolved to its current form. For a developing nation like India, investing in this futuristic technology is imperative to achieve a similar feat like China, which has started to dominate the Artificial Intelligence market.

Currently, in India, investing in cryptocurrencies is legal while the government is still deliberating a formal regulatory approach towards the same. Thus, we have remained a mere spectator in this field so far. While we are confident that the Indian government will heed to experts who advise against a ban, we explore all the plethora of cases that India may lose out on if it indeed happens.

Decentralised Finance (DeFi)

Blockchain technology offers a myriad of financial solutions like savings, lending, payments, and other trading options to name a few. There are many projects that are currently being built on a decentralized ecosystem offering greater degree of transparency and hence beginning to challenge the behemoths of the current centralized and often colluding global financial system. DeFi projects aim to help achieve financial inclusion by obviating requirements such as ‘Minimum Account Balance’ and by negating the high fee structure of transactions.

We believe that DeFi will complement traditional finance, force it to do better, and allow for financial inclusion of India’s 191 million unbanked adults.

Data and Innovation

Companies like Google, Facebook or Uber value user data to maintain their edge over new entrants in the market. Recently, many allegations of misuse and non-conformance to privacy have been raised against such companies. Cryptocurrencies and its underlying blockchain technology have the ability to democratise this data by storing it in a secure and auditable common public database accessible only by those entities that an user accord permission to.

Imagine a taxi service built on top of an open source platform (like Ethereum) that takes no share of revenue from both the taxi driver and the passenger. For a developing nation like India, it is imperative for us to encourage such innovations and entrepreneurs across industries.

Currency and Investments

India’s dependence on the US dollar can eventually be softened if global trade eventually moves to Bitcoin, a decentralised currency. The country and its export oriented companies can have better predictability with respect to trade and payments. Adoption of cryptocurrencies will also ease inflow of foreign investments from new age behemoths who are looking for projects to support in this field.

For the common investor, Bitcoin serves as a great alternative investment given the underperformance of traditional assets in recent past. Historically, US based stocks and derivative products haven’t been made easily available to the Indian investors. Cryptocurrencies offer a level playing field globally to invest and grow wealth irrespective of country of origin.

People and Companies

Cryptocurrencies and Blockchain will drive the next phase of job creation for India’s highly skilled youth. Multiple blockchain projects with global implications are currently being developed in-house. For example, India’s Polygon (Matic Network) is building a protocol and framework to connect blockchain based networks and is considered as a strong contender for overcoming network issues of Ethereum and bringing cryptocurrencies to match Visa’s transaction count.

Nasdaq listed Coinbase, a US based cryptocurrency exchange, has committed to house its IT services based out of Hyderabad in India. It is pertinent to note that Coinbase, by virtue of being in the US, has a valuation of $100 billion while India based exchanges and companies can’t list on Indian stock exchanges as we lack regulatory clarity though our products are world class.

Given the above, blockchain and cryptocurrencies can be the fuel for the Indian atma nirbhar dream. We, thus, appeal for regulatory clarity at the earliest given that it’s probably easier to monitor decentralized cryptography-based systems in India by recognising and regulating the entities in the ecosystem than by banning it.

(The writer is CEO and co-founder, Giottus Cryptocurrency Exchange. Views expressed are personal)