Can India benefit from cryptocurrencies?

India is among the fastest growing economies in the world today. Even so, the rupee is in dire straits and is among the weakest currencies in Asia. The current administration is worried that the advent of cryptocurrencies could create a parallel economy and has taken several steps to curb cryptocurrency trading. Presently, a panel comprising of officials from the finance ministry, the RBI, and India’s market regulator, the Securities and Exchanges Board of India (SEBI) have submitted their report to India’s finance minister, suggesting a new legal framework for cryptocurrencies. The actual content of the report are yet to be made public.

According to the World Bank, India retained the top position as recipient of remittances with its diaspora sending about USD 69 billion back home last year. A rough ballpark estimate might bring the figure to USD 80 billion this year. Statistics by the World Bank highlight that around 25% of the remittance corridors charge commissions upwards of 10% or higher.

Indians are paying approximately around 4 billion dollars in commissions for these remittances. Even if cryptocurrencies were to bring the commision rates down to 1 percent then it would lead to an enormous savings of around 3.2 billion dollars. These funds could instead be used to better the lives of millions in the country; something that blockchain experts can attest to.

It is also very difficult to ban cryptocurrencies due to its decentralized nature. Since, at the most the government can ban fiat to crypto trading but not cryptocurrencies themselves.

Traders can simply convert INR into a foreign currency and then into a stablecoin that is paired with that currency on a foreign exchange.

Also, the nature of P2P trading would make it exceedingly difficult for banks to monitor crypto based transactions.

Instead, a more pragmatic approach is to embrace cryptos and regulate them instead. Not only would this add an additional source of revenue for the government but also help the country make its mark in the digital space. Launching a digital version of its currency could foster transparency and greater accountability in the system. Blockchain enthusiasts need not worry about the road ahead as cryptos shall survive.

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