India is at the forefront of the ‘Crypto’ Revolution; defining Asset Class for new-age digital assets will be a game-changer for the Country’s Economic Growth.
Cryptocurrencies have caught attention as an asset class in the last few years with a $3-trillion market opportunity. They have gone mainstream on the back of their sharp rally despite being famed for their volatility and uncertainties around regulations in many countries, including India. The digital token went further into the mainstream in 2021 as institutions, and retail investors got involved with the crypto market.
The Reserve Bank of India (RBI) has opened a dedicated department for fintech that will help create regulations for cryptocurrency and its upcoming Central Bank Digital Currency (CBDC) for wholesale and retail. However, this is only the beginning of the wave of digital transformation in the world of the Financial Services Industry.
India became the second-highest nation in terms of crypto adoption. Given the current purview, experts believe that 2022 might arguably see India leading the world pack in deriving utilities from the decentralized disruption, provided the government takes a progressive regulatory stance. In India’s efforts to harness technology for enabling financial inclusion, the central government has been progressive in formulating policies that support sustainable and strong economic growth.
Amidst crypto mainstreaming excitement worldwide, 200 million Indians have started investing in this emerging asset class and own $4-5 billion worth of cryptos. While leading crypto companies are taking proactive steps to self-regulate, as an industry, there needs to be a regulatory framework that will standardize best practices across the industry. I hope the upcoming 2022 Budget session will bring clarity around crypto investing and help broaden financial inclusion across the country.
Besides defining the asset class for cryptos, the RBI needs to also look into the next-generation Financial Services and Fintech systems which are using exponential Technologies and Emerging Models like Blockchain, Decentralised Finance (DeFi), Decentralised Autonomous Organisations (DAO, Non-Fungible Tokens (NFT), Digital Assets, Tokenization, Solidity Smart Contracts, Solidity, and RUST Programming Languages.
These tools of Mass Innovation and Transformation will make India Digital, Contactless, and Seamless and will bring in 170x Economic Value over the next 15-20 Years. India will become the “Emerging Tech and Innovation Capital” of the World using these disruptive Exponential Technological Stack. As per the Nasscom report, the crypto industry in India is expected to create nearly 800,000 jobs by 2030.
To summarize, in my opinion, I firmly believe that well-defined regulations around asset class for crypto and blockchain technology will help drive confidence in the ecosystem. Furthermore, the regulation should be forward-thinking, setting precedence to the ever-developing world with respect to its Thought leadership and industry development. This is a very nuanced field, with innovations evolving on a day-to-day basis. Therefore, the industry would require a structure to foster innovation.
