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India's adoption of cryptocurrency will pave way for the next dotcom like revolution, says industry

India's adoption of cryptocurrency will pave way for the next dotcom like revolution, says industry

Cryptocurrencies are not going anywhere, but there is an urgent need to regulate the crypto market and recognise it as an asset class.

Sumit Gupta, CEO and co-founder, CoinDCX said that banning cryptocurrencies can do more harm than good. (Image courtesy: Chandradeep Kumar/India Today Photo) Sumit Gupta, CEO and co-founder, CoinDCX said that banning cryptocurrencies can do more harm than good. (Image courtesy: Chandradeep Kumar/India Today Photo)

Cryptocurrencies are not going anywhere, but there is an urgent need to regulate the crypto market and recognise it as an asset class. This was the sentiment that dominated the panel discussion "Hydra Heads: The roller-coaster world of cryptocurrencies. And what should India do about it" at the 19th edition of the India Today Conclave 2021.

The session saw the participation of cryptocurrency heavyweights such as Kunal Nandwani, CEO and co-founder of the trading technology company uTrade Technology, Sumit Gupta, CEO and co-founder of CoinDCX, Ashish Singhal, co-founder and CEO of the crypto exchange CoinSwitch Kuber, and market maven Sanjay Mehta, founder and partner, 100X.VC.  

At a time when India has mined two crypto unicorns and the sector has received nearly half a billion-dollar investment this year, industry leaders present at the Conclave were bullish on the world’s second-largest internet market.  

China’s recent ban on virtual tokens also loomed large over the discussion. Nandwani pointed out that although China is a huge market, yet the impact of the ban will not be significant. “I see the adoption of crypto as the way forward and there is a need for governments to get comfortable with cryptocurrency as an asset class which has seen a massive growth since past one year," he said.

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The panelists, while trying to demystify the buzz around virtual money, argued that while the crypto market is growing, and will grow even more in the near future, there is a pressing need for better regulations as well as mass adoption.
 
The Indian government is at present mulling over various aspects of these digital tokens. A bill -- Cryptocurrency and Regulation of Official Digital Currency Bill, 2019 –- is at present pending approval from the Union Cabinet, before it can be introduced into the parliament.

India was earlier contemplating banning cryptocurrencies and indications are that, given the humongous rise of these digital currencies among Indians, the finance ministry may be compelled to take a softer approach to it.

However, within the government, scepticism about crypto still abounds. In fact, in early September, India's central bank governor Shaktikanta Das had expressed serious concerns regarding the financial stability of these tokens.

CoinDCX’s Sumit Gupta said that banning cryptocurrencies can do more harm than good and the need of the hour is to engage with the government and masses on this evolving asset.

”In fact, harnessing the blockchain technology in sectors such as banking and the financial insurance industry, fintech, etc. will also attract billions of dollars of investments into India. However, a regulatory grey zone around the cryptocurrency is certainly blocking our opportunities," he noted.
 
He added that understanding cryptocurrency as an asset class that has a store of value will be integral especially for those interested in putting their money into the digital assets.

"There is an old investment principle -- Don’t put all your eggs in the same basket, which holds true for cryptocurrency too. Diversification of investment portfolio is important, and cryptocurrencies can be a part of the same,” Gupta said.

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According to Nandwani, Bitcoin and other digital tokens could be the solution to the challenges faced by the traditional methods of money transfer, especially when it comes to cross-border asset transfers. People have opened up to asset classes lately. In the US alone we saw $10 trillion investments in various assets classes like gold, ETFs, stocks etc. Cryptocurrency was one of them, he said.  

However, the industry stalwarts likened the current hype around cryptocurrency to that of the dotcom bubble in the 1990s and asked the investors to be cautiously optimistic when putting their money into the same.  

With regards to the mega-risks associated with virtual tokens, CoinSwitch Kuber’s Singhal stated that the concept of decentralised finance (DeFi) currency like Bitcoin, etc. is completely democratic where nobody owns the asset, and each investment is secure.

“Besides, understanding the blockchain technology, one also needs to choose the right kind of platform which is secure and trustworthy. We do know there are risks involved, but so are the rewards associated with crypto,” Singhal said.

The trust deficit, which especially some governments have with respect to Bitcoin and other virtual currencies, as per, 100X.VC’s Sanjay Mehta, will dissolve with a fuller understanding of the blockchain technology, which is software digitised with tokens.
 
“If you look at Bitcoin, you will find that it has no employees, owners or shareholders. It is completely decentralised and still functions like a bank,” Mehta said.

He added that from an investor’s perspective, one needs to perform his due diligence and evaluate the risks to avoid scepticism. “As is the case with any investment option, one needs to learn about the cryptos in order to invest their hard-earned money into the same,” the investor cautioned.

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