The cryptocurrency and blockchain industry has had a not-so-great 2019 in India and elsewhere due to lack of favourable regulations and hostile central banks, but things may change in the coming years, say experts.
The year began with shutdowns of cryptocurrency exchanges and layoffs. But with global giants, including Facebook, entering the space and several countries examining the virtual currency and the blockchain technology behind it, and the industry itself looking at self-regulation, experts suggest Indian crypto startups stand to gain.
“Governments across the globe are now examining blockchain and cryptocurrencies, including stable coins, as well as selfregulated and global regulatory standards, which indicate more widespread public adoption,” said Changpeng Zhao, CEO of cryptocurrency exchange Binance, which recently acquired local exchange WazirX to enter the Indian market.
“I think in 2020, we will see different experiments tried by many different governments around the globe for adoption. Some will work, some may not, but overall, they will have a tremendously positive effect for crypto adoption,” he added.
Last week, the Reserve Bank of India reiterated its opposition to private digital currencies. A panel headed by former finance secretary Subash Chandra Garg had earlier this year recommended making cryptocurrency trading in India illegal. Nevertheless, the RBI has begun consultations with other central banks on India’s own digital currency.
China is reportedly set to launch its own digital currency by 2021. Countries such as France, Singapore and Malaysia are also testing similar virtual currencies.
Tanvi Ratna, the founder of policy and regulatory advisory firm Policy 4.0, said the launch of the Chinese sovereign coin would influence Indian regulatory strategies. “Too much has shifted in the global regulatory front, and that will already start impacting Indian startups, regardless of the Indian government’s decision. The blockchain world in 2020 is going to look a lot different from the last year or two,” Ratna said.
However, startups working in the space in India are looking at shifting their offices to countries that offer favourable policies, said neo bank Juno’s cofounder Varun Deshpande. But despite the regulatory challenges, the startups are innovating in the space.
The interest in crypto trading and engineering new innovations in the space has only risen in India, said Ramani Ramachandran, the CEO of Singapore-based crypto firm ZPX.
“There are pronouncements of these kind (against private digital currencies) but on the ground level there are a bunch of companies coming up.”
While the government and RBI had shown concern against the proliferation of private digital currencies, their interest on the subject has been lukewarm, said Sathvik Vishwanathan, the CEO of cryptocurrency exchange Unocoin.
Vishwanathan said unless there were big moves by authorities across the world banning or allowing cryptocurrency trade, the matter was unlikely to be a part of the Indian government’s agenda.
The industry is, meanwhile, waiting for the Supreme Court’s decision in a case challenging the RBI’s ban on use of banking channels, and the ruling is expected to determine the direction of the cryptocurrency ecosystem in India.