INTERVIEW: Old-school regulatory framework for traditional assets won’t work for cryptocurrencies and blockchain, says CrossTower CEO
CrossTowerestimates that the crypto industry can add $1.1 trillion to India’s economy over the next 11 years.
- In an interview with Business Insider, co-founder and CEO Kapil Rathi highlighted that while India doesn’t need a new regulator for the crypto industry, the traditional way of handling securities and assets won’t be sufficient.
- The regulation also needs to be equipped to handle new players like decentralised organisation, wallet managers and custodians.
But, that doesn’t necessarily mean setting up a whole new regulatory system for the crypto sector. Instead, the Indian authorities should create an off-shoot or sub-division within an existing regulatory body and invest in the right resources, according to co-founder and CEO of CrossTower, Kapil Rathi.
I don’t think we want to create another regulator [for cryptocurrencies in India] — crowding the field when it comes to regulation is never a good idea.
CrossTower pegs the success of the crypto industry in India on public-private partnerships, grants and frameworks for education, sandboxes for regulatory clarity, venture capital programs and incentives for foreign investment.
Old-school framework for traditional assets won’t work for cryptocurrencies and blockchain
According to Rathi, while India doesn’t need a new regulator just for cryptocurrencies, the existing framework for regulating assets or securities will not be sufficient when it comes to tokenomics. It will take specialisation to be able to tell the scams from the legit projects.
According to a cabinet note seen by NDTV, India’s markets’ watchdog — the Securities and Exchange Board of India (SEBI) — will be incharge of regulating crypto exchanges in India. “You can’t apply the traditional assets’ framework on a new technology and a new asset class, where some of these tokens are not even run by organisation — there are no companies to go out to,” Rathi told Business Insider in an interview.
CrossTower has based its $1.1 trillion estimate on three factors — the scope of India’s startup ecosystem, the young age of the country’s population, and the projected growth of local developers. As these aspects mature, India will attract more capital inflows from abroad, provided it keeps its doors open to the rest of the world.
The ecosystem is venture capitalists (VCs), investments, blockchain platforms — like Alogrand, Solana and Polkadot… Investment, the capital and the foreigh direct investments (FDI) will start coming in from VCs, as well as these international protocols, as stakeholders start looking at India as a potential [location] to expand their global footprint.
India will need to invest resources to get crypto right
Whether it’s SEBI at the helm or any other organisation, additional resources will have to be invested in educating the employees or hiring the right talent, according to Rathi. “I can’t imagine people who have regulated commodities or even securities 20-30 years ago are 100% equipped to understand the intricacies of this asset class,” he told Business Insider.
India’s digital dream may need to pivot
According to Startup India, the country has the third largest startup ecosystem in the world — home to approximately 50,000 startups as of 2018, 20% of which were tech startups. It currently has the highest natively digital population in the world, with a developer base of 2.8 million. By 2023, barely two years down the line, India is projected to have more developers than any country around the world.
Last year, lending tech startups in India’s ‘Silicon Valley’, Bengaluru, attracted $682 million in VC funding. “Given lending is a significant past of DeFi [decentralised finance], digital asset startups can likely add on to this funding figure,” noted CrossTower’s report.
India is also home to two unicorn startups. Both CoinSwitch Kuber and CoinDCX, announced fresh funding this year with valuations exceeding $1 billion.
India’s geopolitical power, status and leadership over the next 20 years is inextricably linked to the policies and regulatory framework that it implements today with respect to digital assets and the Web 3.0 industry.
Rathi and fellow co-founder of Cross Tower Kristin Boggiano have been in India over the past week talking to regulators and policy makers. According to them, the framework of the bill is evolving everyday. However, the overall sentiment seems to be positive.
Given the way the government's perspective is evolving, it’s going to be a gradual process. Step one is a willingness to understand the technology [and] a willingness to create a regulatory framework.
CrossTower is rated to be the fourth highest-rated crypto exchange globally by CryptoCompare’s grading system. According to trading volume, however, it ranks 105 on CoinMarketCap’s tracking platform.
In October, CrossTower hit a personal all-time-high of $587 million in trading volume. The milestone comes a month after the crypto exchange began to offer service in India on September 30. It’s market share also gew by 63% with total assets under management (AUM) coming upto $150 billion.
CrossTower’s total global trading volume comes up to $3 billion as of December 8 since its inception last year.
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