The past year has seen a major upheaval in the Indian blockchain and cryptocurrency industry. On one side we saw the central bank moratorium on banking services (will explain this in a while) and on the other, I have personally witnessed a surge in activities in not only the technology adoption and development, but also the volumes in cryptocurrency trading. That too despite a few major hurdles in the way.
Image Source: https://medium.com/@pmofficial95/crypto-fights-to-shed-ankle-weights-87e4d46188c5
The past year
The following are some line items of what happened in India over the past year which acted as the hurdles I mentioned above:
- Government’s stance: In a carefully guarded statement in the financial budget last year (Feb 2018), our last finance minister Mr. Arun Jaitely said that cryptocurrencies are not legal tender and that the government will try and work towards curbing the proliferation of all “Crypto Assets”
- Central Bank’s stance: In April last year, our central bank Reserve Bank of India (RBI) sent out a notification to all its member banks i.e. under its regulation, to stop providing services to all and anything crypto. This took effect within 3 months of the notification.
- Fall of trading volumes: the volumes on the Indian crypto bourses fell by more than 80% from July 2018 onwards as internet banking was cut-off from the exchanges.
- Crypto Exchanges: Out of 15 known exchanges in April, only 6 survived excluding LocalBitcoins. Those which probably had the cashflow survived, evolved and started P2P trading. 2 other exchanges closed recently (within the 1st two quarters of 2019). Most others were non-starters.
- Scams: The country has been hit by a spate of Cryptocurrency investment scams which has led to huge losses to the people. It is estimated that more than a Billion Dollars’ worth of scams have happened in India in the past 3 years. People were scammed into get rich quick schemes.
- Brain Drain: The biggest and probably the first crypto exchange in India, Zebpay, moved out of India and established its base in Malta earlier this year. WazirX has also gone global with an eye on grabbing more volume. We saw the launch of many new Blockchain tech companies outside India. They chose to go overseas owing to the uncertainty in the country. So, what could have been a “Made in India” product will now be “Made Elsewhere” one, despite the entire management comprising of Indians.
- Media and Bureaucrats: Some overzealous, educated and enterprising authorities and bureaucrats have been going around talking to the media and creating draft documents which are creating FUD. These are educated people, who simply want crypto banned because “Bitcoin is a Ponzi “scheme”. Moreover, FUD also gets created by rumours peddled by mainstream media by writing irresponsible and sensationalizing reports.
- Company law dilemma: Despite Prime Minister Modi’s digital agenda, and harping on blockchain several times in some industry forums, the Registrar of Companies under the Ministry of Corporate Affairs has refused to accept company names even with the word ‘Blockchain’.
These caused the better half of 2018 to fall flat in terms of Crypto engagement. Having said that, Crypto is still not ‘banned’ in India – while the perception seems to be that it is.
Such is the status. But here is why the ray of light is getting brighter day-by-day.
The advent of opportunity creators
Image Source: https://www.indiabitcoin.com/india-gets-its-own-blockchain-and-virtual-currency-association/
India is a super populous nation. 1/5th of the planet lives here and we thrive under pressure. History is witness that we face and we overcome. The people and industry got together in small and effective ways to not let crypto and the tech fall off the map of India.
Here is what has happened in the past.
- Trader Community: Those with an affinity for crypto never left. In fact reports suggest that the traders have increased; in fact, if you look at this Infographic, India ranks 11th in the number of traders with 2 Million traders. Internal reports suggest that India has more than 5 Million crypto traders. This is a good number considering the fact that there were no direct banking services available for the past 1 year.
- Global Platform support: Indian technology experts started building platforms which are creating a buzz in some well know international platforms like Binance. The Binance Launchpad supported some amazing technology platforms from India – e.g. Matic Network, and Marlin Protocol among them. These are some serious Layer 2 and Layer 0 technologies which are working very hard to make a mark and bring India too on the global blockchain map.
- Technology Builds: Some of the biggest technology and consulting companies in India are working towards creating Blockchain based talent and resources for a larger market. Tech Mahindra, IBM India, the Big4s are building their practices for Blockchain.
- New Startups: I have seen some amazing tech guys braving the current perceptions and starting on their own. And they are increasing by the day.
- Increased Interest in Blockchain Education: I started teaching about Bitcoin since 2016 to small groups of people. This number started growing and expanded to larger sets of people in the whole of 2017. This slowed down to a trickle in 2018 after the RBI moratorium. This was the result of a perception that Crypto has been banned. However, what started happening in the meantime was the formalization of Blockchain in premier institutes of India. The technology institutes like IIT and IIIT have started offering formal blockchain courses. More and more new courses have started online and there has been a phenomenal jump in the number of people – technical and non-technical – taking these courses and becoming equipped for global Blockchain jobs.
- New Initiatives by some State Government – Some state governments have started taking avid interest in Blockchain and many have started to size this up as an opportunity for investments and growth.
- The State of Telengana has recently come up with a draft policy on setting up a Blockchain district to offer regulatory and policy support for blockchain startups based in Hyderabad.
- The National Payments Corporation of India is planning to use blockchain technology to boost digital transactions.
- The nation’s Export-Import Bank (Exim Bank) to conduct research on blockchain technology in partnership with banks in the BRICS economic bloc.
- New Job requirements – Job portal Naukri.com reported a growth in the number of jobs related to Blockchain. Here is a snapshot from Google searches I did.
What do we really need now?
I guess I would have said freedom to choose, but freedoms come at a cost and the cost in this case is involvement of the authorities. With the spate of scams in the country, I think the authorities need to get involved.
- In the current state of affairs, the least we need is a regulatory framework, which defines this landscape in the best possible manner. We need a framework of rules and regulations, which are conducive to growth, inclusiveness and definitely not restrictive.
- We need more people who are willing to educate the general masses to increase crypto awareness. We also need more organized community building activities and meetups which take crypto and tech to the masses.
- The Blockchain story cannot be built on its own. Traditional industries need to be involved in the Blockchain and crypto discussions. Bringing the industries together will increase adoption of both the tech as well as cryptos.
With the outlook shared by some wings of people among the authorities, it seems the Indian Blockchain community is in for a long haul.
Here is what I believe, India has always been the powerhouse Technology service provider and has been the back office of the globe. However, this technology and a little bit of government push, will change this forever.
Those who really believed in this technology and the assets stayed on the mission despite the uncertainty. We kept the Crypto idea alive with a #IndiaWantsCrypto #IndiaForCrypto campaign on Twitter (follow me @Shaanush). We kept the Blockchain dream alive by simply building – continuously building.
India is seeing the arrival of a new fearless bunch of movers and shakers of the blockchain industry.
We are poised to take over the lead in this technology and soon enough we might become the Ground Zero for Blockchain and Crypto.