India's Crypto Currency challenge

Cryptocurrency is the most talked about over the decade or so but ahead of the budget and after the budget presented by Union Foreign Minister Nirmala Sitharaman, many are still wondering about India's cryptocurrency challenge and how corporates are reacting to it. However, before analyzing how corporate reacted let us find out what is cryptocurrency.

Crypto or cryptocurrency in simple terms is a digital currency used as a medium for exchange on which the government or bank has no authority. There are four types of cryptocurrency and they are Defi, NFT, utility tokens (Bitcoin, litecoin), and yield farming tokens. As governments and banks across the world have no hold on cryptocurrencies more than 50 countries banned cryptocurrencies and are ahead of the budget, tension increased among those in India who invested in cryptocurrency as to whether the Union Government headed by PM Modi would ban cryptocurrency.

But the government's decision not to move forward with the bill to ban cryptocurrency came as a huge relief for the investors. Finance Minister Nirmala Sitharaman said the bill is awaiting the approval of the Union Cabinet. However, the government made it clear that it will soon bring  Central Bank Digital Currency (CBDC) in India. Banning cryptocurrency in India is quite difficult as according to research findings India is the highest investor of cryptocurrency.

Now that Finance Minister Nirmala Sitharaman announced that a digital rupee would be launched which will boost the economy, corporates reacted cautiously to the development. Finance Minister though did not elaborate much on the digital rupee, she said it will be completely different from the current and existing cryptocurrency and other digital assets. Speaking to scribes Nirmala Sitharaman went on to record “A currency is a currency only when it is issued by the Central Bank, even if it's a crypto. By anything which is outside of that, loosely, all of us refer to be cryptocurrency, they are not currencies,”

Nischal Shetty, CEO of cryptocurrency exchange and wallet WazirX, reacting to the development said " It is a phenomenal decision. This move will pave the way for crypto adoption and put India in the front seat of innovation,”.  Sumit Gupta, Co-Founder, and CEO of cryptocurrency exchange CoinDCX. said “Introduction of CBDC sends a clear signal of India being a digital-first, efficiency-driven, and transparency-led system,”

Avinash Shekhar, CEO of cryptocurrency exchange ZebPay "RBI's launch of digital currency will help people of the country realize the advantages of cryptocurrency and motivate them to invest more in it and cherish the benefits. The Budget focused heavily on integrating technology across sectors, and the gradual acceptance of a digital currency, blockchain, and virtual digital assets has the potential to make India a leader in this new paradigm of blockchain-enabled revolution,”

Shivam Thakral, CEO of cryptocurrency exchange and wallet BuyUcoin," Introduction of digital currency will help in strengthening the blockchain infrastructure in India. If RBI allows the trading of CBDC on private exchanges, it will add a new dimension to public-private partnerships in India's fintech space,”  Ashish Singhal, Founder and CEO of cryptocurrency exchange CoinSwitch Kuber and Co-Chair of Blockchain and Cryptocurrency Assets Council (BACC), said " The introduction of digital currency will accelerate the digitalization. We also believe that various budget measures to improve digital payments adoption will induce more digital-savvy Indians into the financial ecosystem willing to explore newer forms of investing and wealth creation,”

Even many other experts from the corporate industry echoed the same views. Vishwas Patel, Payments Council of India (PCI) Chairman, and Director Infibeam Avenues said "The formal announcement on the launch of India's CBDC - the digital Rupee, was a much-awaited and positive move and will trigger a wave of preparatory activity amongst retail payments providers," Harshil Mathur, CEO and Co-Founder of payment gateway RazorPay, says "The introduction of the digital Rupee would help reduce financial and physical efforts required for money management"

Puneet Gupta, Managing Director and Vice President of data management firm NetApp India added ' Finance Minister's statement on the introduction of the digital currency would help create a framework for emerging technologies". Digital Payments Strategist Ram Rastogi says " Introduction of digital currency or Central Bank Digital Currency will help users to make digital payments not just in a traditional digital sender-to-digital-receiver way but also in a digital-sender-to-offline-receiver manner. Smartphone users may make digital Currency payments via a QR code, while the non-smartphone users may make the payments through an SMS string-based e-voucher" He added, "A successful implementation of the digital currency would not only curb black money but would also counter the craze for private cryptocurrencies,” . Venus Dhuria, Co-Founder of mobile Internet technology firm AppyHigh says "The use of blockchain technology for digital Rupee also shows that the government is preparing for a future where these concepts will become mainstream"

Market experts analyzing the developments feel that the introduction of new currency like the digital currency will prevent leaks reducing the dependency on physical cash and its volatility.  Rajosik Banerjee, Partner and Head, Financial Risk Management, KPMG in India sharing his views said “Digital Rupee using blockchain technology will lead to stable, efficient, regulated payments and settlements and lower transaction cost,” . Abheek Barua, Chief Economist, HDFC Bank says  ' We need to wait and watch. The implications of the same will have to be thought through further,"

Some experts however expressed their concerns. Arjun Khazanchi, CLO and Co-Founder of crypto and digital asset management platform Rooba Finance says  “Significant issues such as security, custody of keys, and access start to come into the forefront of the discussion,”  Pankit Desai, Co-Founder, and CEO of Mumbai-based cybersecurity startup Sequretek, added "The government should focus on raising awareness and education around the importance of cybersecurity, privacy, and data security among businesses and consumers alongside bringing technological advancements in digital payments for sustainable growth"

Madhusudan E, a member at Fintech Association for Consumer Empowerment (FACE) and Co-Founder & CEO at personal loan platform KreditBee added "The government decided to introduce digital currency. However, the implementation process of the digital currency is something to pay attention to as there are a lot of security issues involved and associated with it"

Some say the decision of the government not to recognize other cryptocurrencies will result in other challenges. Probir Roy Chowdhury, Partner at law firm J. Sagar Associates says “As a result, free-market players will not be permitted to operate or use cryptocurrencies other than the digital currency issued by RBI. This will prevent market players from entering into several digital transactions that require other kinds of cryptocurrencies. The only way to bridge the gap would be to come up with a set of regulations to govern all kinds of digital currencies in use in India, instead of the government-controlled currency."


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