Infosys co-founder Nandan Nilekani wants crypto in India to be treated as an asset class but not a currency
Nandan Nilekanibelieves crypto has stored value, just like gold or silver, but lacks transactional value.
- Unlike Musk, though, Nilekani has a balanced approach to
cryptocurrencythat includes the co-existence of UPI.
- The Indian government was highly reluctant about cryptocurrency in the beginning and banned it in 2018. The Supreme Court overturned that ruling.
- Even crypto exchanges have asked the government to consider cryptocurrencies as an asset.
AdvertisementOften considered one of India's most respected voices,
"Just like you have some of your assets in gold or real estate, you can have some of your assets in crypto," he spoke to Financial Times in an interview. "I think there's a role for crypto as a stored value but certainly not in a transactional sense."
Nilekani is often credited for kickstarting the IT boom in India and creating an industry unlike any other. He's also the architect of the Aadhaar biometric identity project that's handled by UIDAI (Unique Identification Authority of India). While the government mulls over regulations, backing from an expert adds a lot of confidence for new investors. A phenomenon that Tesla co-founder Elon Musk currently masters.
Unlike Musk, though, Nilekani has a balanced approach to cryptocurrency that includes the co-existence of UPI (Unified Payments Interface). He thinks that the homegrown payments solution is much more effective as it's not volatile and requires minimal energy. UPI is a protocol developed by NPCI (National Payments Corporation of India) that allows peer-to-peer bank transfer across all banks in the country. The technology has real-time settlement, and transfers barely take a second to go through.
Unlike the developed markets, India is one of the few countries to skip the debit or credit card revolution and directly join the mobile payments trend thanks to affordable phones and inexpensive internet connectivity. The system is already designed to handle a billion transactions each day, eliminating the need for cryptocurrencies for payments.
At the same time, Nilekani is confident that cryptos can be a solid asset in the coming years. Blockchain as a technology has gained massive momentum, and India's IT companies are at the forefront of it, servicing hundreds of multinational clients.
"Indian regulators are also considering a Central Bank Digital Currency or CBDC. I am not sure if we need a stable private coin or if a digital rupee will be good enough. We need to look at how it will help Indians, how MSMEs can access capital using Bitcoins. No amount of tech is going to sway anyone's view," he further added. With a market cap of more than $1.5 trillion, crypto can allow the community to pour its wealth into the Indian economy.
The Indian government was highly reluctant about cryptocurrency in the beginning and banned it in 2018. A Supreme Court ruling overturned the ban soon, however investors remain concerned. This is because some Indian banks remain cautious, despite RBI’s clarifications on its 2018 circular.
Even crypto exchanges have asked the government to consider cryptocurrencies as an asset. And as they await regulations, India’s crypto players have decided to form a self-regulatory board under the industry-body IAMAI and set some bare minimum guidelines to curb fraud.
The cryptocurrency world is exceptionally polarised, and everyone has a differing point of view. Evangelists call it a revolution, technocrats believe in blockchain's potential, the nay-sayers are convinced it's a bubble, while some are just watching the circus do its thing. Smart and sensible cryptocurrency regulations are the need of the hour.
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