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Why India Must Use Crypto To Power Next Level Of Fintech Growth

WazirX Cryptocurrency: Why India Must Use Crypto To Power Next Level Of Fintech Growth

Why India Must Use Crypto To Power Next Level Of Fintech Growth

*This is in partnership with BloombergQuint BrandStudio

Even the most conservative of investors are saying crypto is an asset class they cannot ignore any more. Bitcoin has hit a new high, and with greater institutional buy-in than ever before, it’s not a cliché to say that the sky seems to be the light.

In several ways, the first half of 2021 brought exceptional focus and awareness to the crypto industry. While Bitcoin is now a store of value and an alternative to traditional asset classes, Ethereum's Initial Coin Offerings [ICOs] are working as an alternative means of raising capital.

But crypto is much bigger than Bitcoin or Ethereum. Growing at an astonishing pace, it will change the very foundations of how money will be represented and invested in India and around the world. Specifically, to India, crypto can make vast amounts of capital available to Indians with a digital wallet in the same manner that data is made available through the Internet with a smartphone.

Make Crypto an Integral Part of IndiaStack

With millions of smartphones, access to Unified Payments Interface [UPI] and crypto support can turn every phone into a bank account. It can attract global crypto capital and catapult India into the finest cutting-edge financial system of the 21st-century till date. Adding crypto assets to the IndiaStack digital wallet—UPI, GST, Aadhaar—will also allow foreign crypto investors to invest in the promise and potential of the fast-growing Indian economy.

It will allow business owners to embed the digital wallet into their websites and mobile applications and address various use cases such as stock markets, crypto exchanges, foreign exchanges, international crypto investments in India and remittances.

Accelerate Finance Technology with Block Chain

The number of global blockchain wallet holders has crossed the 70 million mark. Closer home. India’s leading crypto exchange WazirX started 2021 with nearly 1 million users. In a mere ten months since then, the platform now boasts of 8.5 million users—over 8X growth. Interestingly, it took WazirX over three years to get to the 1-million mark.

This is clear evidence of the crypto’s influence in democratising finance and aiding individuals to build wealth while enabling them to control their assets better.

When used correctly, crypto/blockchain will revolutionise fintech ecosystems without intermediaries and be capable of lightning-fast transactions, complete transparency and peer-to-peer networks. It will help users have complete control of their assets and pave the way for a wholly democratized financial landscape.

Blockchain can also pave the way for more agile and transparent payments due to the low cost to transfer between accounts. And since blockchain transfers do not require the authorization of middlemen, banks will not need to use resources to transfer funds, thus reducing payment processing fees.

Fintech in India has become an influential force in modernizing conventional financial institutions. Beginning from the past decade, we are transitioning towards a cashless society with increased investment opportunities. Blockchain technology will further bolster fintech development and pave the way to democratize finance in India.

Crypto will Boost India's Economy

In March 2020, two main events spurred crypto adoption in India. The historic verdict from the Supreme Court and the COVID-19 pandemic. With several skilled engineers idle during the lockdown, many looked towards cryptocurrency as a side hustle in becoming traders, crypto influencers and technical analysts. Further, using technology to create and sell Non-Fungible Token (NFT)-based digital art became an excellent pathway for independent artists who used the WazirX NFT platform as a digital payment gateway for royalties. Additionally, several institutional investors followed suit to boost the adoption of crypto assets.

Today crypto assets have crossed $2.7 trillion in value and are growing at more than 100% per annum.

For India to emerge as a $5 trillion economy, policymakers need to close the $250 billion small business financing gap by attracting global, risk-tolerant pools of capital and tapping the rapidly growing crypto economy. India can deploy new crypto wealth in a controlled manner and resolve SME/MSME financial inclusion. Cryptocurrency inflows from investors will help enhance SME/MSME access to low-cost global capital; GST-registered companies could receive capital against their issued e-invoices and more. Global crypto capital flowing into Indian SMEs will also enable the credit system to migrate to collateral-based lending. Indian start-ups will also benefit from crypto crowdfunding; Indian SMEs will access global decentralized financial lending pools, while Indian students will receive funding with personal tokens.

Need for Forward-Looking Strategy & Policies

A progressive crypto policy will be instrumental in revolutionizing the overall financial infrastructure, safeguarding national security, deterring financial fraud, strengthening monetary policy, attracting international capital, creating more job opportunities and retaining tech talent in India to boost technological development. India's micro, small and medium scale enterprises, which the Reserve Bank of India estimates need 20-25 trillion rupees in funding beyond existing domestic pools can be addressed with decentralized finance.

The time is now to tap into the massive potential of crypto. Crypto could become to Indian finance what the Internet is to information. Just as the Internet gives the average Indian access to new sources of information worldwide, crypto assets will provide every Indian direct access to new sources of capital. This will fuel the nation’s Digital India mission and our goal of genuinely becoming Aatmanirbhar.