on the crypto
The decentralized digital ledger of transactions, blockchain, has significantly changed the financial sector since its announcement in 2008. It has resulted in decentralization, improved security, immutability and overall network performance.
Since its debut, Asian countries have been at the forefront of their adoption. While China and Japan were the first leaders in the sector, India is quickly catching up.
The situation of cryptocurrencies in India
India currently has the largest number of cryptocurrency owners; 100 million Indians now own a cryptocurrency; an amazing feat. However, cryptocurrencies have not always been accepted in the country. In early 2020, cryptocurrencies were still illegal in India after the 2017 ban on banking.
The cryptocurrency ban was almost lifted in early 2021 with the "cryptocurrency law". However, the bill was met with much criticism and was never passed. Balaji Srnivasan, the former Chief Technology Officer of Coinbase (NASDAQ shares: COIN), warned:
“India could become 20% poorer than it could have achieved in five years. It's almost like banning the internet for 5 years. The losses add up a lot. It would be a reversal of economic liberalization in many ways. Basically it would ban the financial internet from entering the country ”. Things have changed since then, with India ranked as the second largest user of cryptocurrencies in 2021. Additionally, the Reserve Bank of India (RBI) has advocated the use of a digital currency, with SEBI announcing the launch of a new blockchain network for the nation.
SEBI will monitor the financial instruments
Indian securities and commodities market regulator, SEBI, the Securities and Board Exchange of India, has announced that it will launch a blockchain network to improve its financial sector. The launch of a blockchain network contradicts some of India's hostile stances against cryptocurrencies.
According to SEBI, the blockchain network will be used for security and pact monitoring of non-convertible securities. Market regulators will use blockchain to closely monitor the credit ratings of non-convertible securities and covenants, which are terms embedded in a debt contract.
In the announcement, market regulators noted this
The system will authorize bond trustees, issuers, credit rating agencies, etc. to update the data / information and would be accessible to other entities such as exchanges, custodians etc. the news. While praising the use of blockchain technology, many traders voiced their concerns about the new margin rules of the SEBI system.
India is looking to launch a cryptocurrency
Many hypotheses have been confirmed by the governor of the Reserve Bank of India (RBI), Shaktikanta Das; India is getting a central bank digital currency (CBDC). On Friday, Shaktikanta Das announced that the RBI could launch a pilot project of its digital currency by December.
While believing that India needs to be extremely careful when approaching a CBDC, she has asserted some merits. First, replacing large cash transactions with CBDCs on the blockchain will reduce the costs of printing, transporting, storing and distributing currency.
India is not the only country that is following the path of a CBDC; the People's Bank of China, the Bahamas, the European Union, Switzerland, Lithuania and a growing list of countries are testing the efficiency of a digital currency.
