Cryptocurrency is no more an illegal tender or business in India. Many FinTechs, Global crypto companies are expected to enter India’s crypto market. VCs and angel investors are looking for opportunities to invest in such FinTechs. Why the FinTechs in cryptocurrency will rise in India and what does opening of cryptocurrency segment in India mean? ETBFSI explores…
India may soon have a significant number of FinTechs operating in the cryptocurrency segment. After Supreme Court quashing the RBI ban, the road for FinTechs to enter the cryptocurrency segment is clear.
“This is a huge win for crypto investors and startups who are working on new ways to build business-backed on blockchain and tokens,” said Sanjay Mehta, Founder, and Partner, 100X.VC.
The Reserve Bank of India had earlier banned cryptocurrency. In fact, RBI didn’t allow any startup to make innovation in the cryptocurrency segment. FinTechs and companies in crypto segment either shut their shops in India or moved to different countries after RBI’s ban.
Supreme Court has found, RBI’s ban on cryptocurrency as disproportionate.
“I think the Supreme Court intelligently has seen that they cannot stop it, and the ban was not well thought of so they have lifted the ban,” Said Sankalp Shangari, Blockchain Investor, Singapore
This move will certainly encourage FinTechs to get into crypto business. Also, foreign FinTechs, Crypto companies are expected to enter in India.
Why FinTechs in cryptocurrency in India may rise?
With 1.3cr population, India is a lucrative market for Cryptocurrency companies. FinTechs have seen huge interest in Cryptocurrency by Indians.
“It’s a huge customer base and transactional volume. Our blockchain-related activities will also accelerate since we’ll be able to utilise it. We’ll be able to tokenise many other asset classes, said Praveen Kumar Vijaykumar, Chairman & CEO, Belfrics.
Belfrics is running a crypto exchange in Malaysia that entered India a few years back but remained inactive after RBI’s ban.
Venture Capital, Angel investors are interested in financing crypto startups.
“Indian Startups which moved out of the country should now come back and set up shop in India. VCs should start looking at investment in crypto startups. Crypto winter in India is over,” added Mehta.
“This judgment opens the door for millions of Indians to Invest/buy/sell crypto via bank accounts in a safe and responsible manner,” said Harish B V, Co-founder, Unocoin, also a member of the BACC,
The FinTechs operating in blockchain space will gear up.
“Lifting ban on crypto gives an impetus to startups in blockchain space in India a boon and opens up for more innovation using blockchain projects, right now 75% of the blockchain-based startup are drained to other countries for a crypto-friendly regulated countries,” said Ram Krishna. CoFounder & Chief Operating Officer, Zoreum Blockchain Labs.
What will RBI and SEBI Do?
After the Supreme court’s judgment RBI and SEBI both may frame regulations and craft a policy accordingly.
“Now that this ruling has come, the regulators will have to gear up, or rather accelerate the regulations for this particular industry,” added Vijaykumar
Naveen Surya, Chairman, Fintech Convergence Council of IAMAI, said “Industry is looking forward to working closely with the regulators to mitigate all possible risks related to Virtual Currencies and foster the growth of these game-changing innovations. India is at the forefront of all Digital and an inspiration to the world, our balanced approach between risk and innovation can become a role model for the world.”
The big boost will be for startups who want to raise funds through Initial Coin Offerings (ICOs).
“MSME business in India may raise funds through ICO’s abroad but cannot use these funds in India. To facilitate such businesses, Regulators should now put in place appropriate regulations to regulate markets concerning crypto assets,” said Aditya Tiwari, Independent Council, (FinTech)
Germany was the first country to frame regulations for Cryptocurrency. There are many countries like, the Philippines, Thailand, Malaysia, Japan, Bahrain, Estonia have allowed cryptocurrency. In fact, in a few countries like Malaysia, cryptocurrency is a legal tender.
There are more than 3000 cryptocurrencies in the world and around 500 crypto exchanges. It’s an innovative model run on the blockchain but regulators had their defend behind not making it legal.
Supreme Court judgment has cleared the air, but ultimately regulators will have to protect the safety of the investors.