Domestic Players, Experts Bat for Crypto
Over the last one and a half years, ‘Cryptocurrency’ and its usage were always in the news especially after RBI dissuaded banks in dealing with any virtual currencies. And now with the Supreme court of India finally annulling the RBI’s 3-year-old diktat, governments, political leaders, economists and investors are now increasingly recognizing the potential of a blockchain-based decentralized financial system.
While India remains a small player in the global market when it comes to trading in cryptocurrencies, Indian players, including ZebPay, Giottus, others, and experts expect growth in the long term. Says Avinash Shekhar, Co-CEO, ZebPay, a crypto exchange firm: "We have grown by 30-40 times over the last few years. Even though the volatility factor may be there, we are expecting a very healthy growth in the long term.” Shekhar believes that the Crypto industry, including bitcoin and Ethereum, is creating an infrastructure that is bigger than the internet.
Unlike fiat currency, where a centralized authority controls and regulates the transactions, cryptocurrencies are decentralized and work on a peer-to-peer system. As an asset class, cryptocurrencies offer a level playing field to invest and grow wealth, irrespective of country of origin. And as they are evolving, they have faced resistance from central monetary authorities including RBI in India.
Talking about future projections, Shekhar said, “The overall transaction volumes of the Indian crypto market were worth $30-40 billion last year. By next year, it is expected to reach 100 billion keeping external factors in mind.”
As per coinmarketcap.com, the overall market capitalization of the global cryptocurrency market stands at US$ 1.63 trillion ($2.1 trillion at its peak) with the average daily trade volumes hovering at US$ 200 billion. Though the recent price correction has reduced the overall market cap by more than 30 per cent, top digital currencies like Bitcoin and Ethereum have grown by more than 100 per cent even at the current price levels, as per industry observers.
“You cannot stop technology or science that is snowballing quicker than ever. It is prudent to embrace it and build an ecosystem around it to become future leaders in that space It is easier to regulate cryptocurrencies than to ban them. Tracking trade and holdings is easier done by regulating the industry rather than banning it and pushing it to a parallel opaque economy,” asserts Vikram Subburaj, Co-Founder and CEO, Giottus Cryptocurrency Exchange.
While the government of India is ready to embrace virtual and digital currencies, it is also training its guns on implementing crypto forensics software tools for strengthening anti-money laundering systems in banks and financial services institutions by creating its own regulation and tracking capability.
Deepak Kapoor, founder BEGIN India Think Tank reveals, " Cryptocurrency cannot be equal to fiat currency & there should be exemplary punishment for violation of our sovereign currency i.e., the Rupee. Then there is the need for Law Enforcement Agencies (LEA)s & Legal system to create the knowledge systems to investigate, gather forensic evidence & convict crypto-criminals.”
To address Kapoor concerns, Subburaj from Giottus opined that the alternate way forward would be to regulate cryptocurrencies and ICO's with a framework and taxation guidelines to prevent laundering and misuse. “This will help India to be one of the leading countries in the blockchain revolution as we have a lot of talented start-ups out of India working on it,” he avers.
TechSci Research claims that Cryptocurrency is slowly emerging as a majority investment class especially among millennials and the gen-z population of the country.
“Improved risk assessment models, tax regulation of cryptocurrencies, the introduction of mandatory user identification through knowing your customer (KYC) procedures, development of protocols that allow tracking transactions, and the adoption of legislation on digital assets are some other trends of the cryptocurrency market,” predicts Karan Chechi, Director – TechSci Research.
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