By Navin Gupta
India has enjoyed great innovation and adoption of digital payments since the 2016 demonetisation. Especially with blockchain technology and digital assets entering the mainstream, people have been exploring new ways to apply the technology in payments and elsewhere. This enabled a robust ecosystem of innovations developing for blockchain projects and startups in the country, particularly in states such as Karnataka, Telangana and Kerala. Sadly, this momentum came to a halt when the Reserve Bank of India prohibited regulated entities, including banks, financial institutions, or payment companies from offering services to digital asset providers due to concerns of illicit activities.
This March however, the Supreme Court of India struck down the ban, signalling that there may be an opportunity for India to be once again at an industry leading position when it comes to the development of blockchain and digital assets. But in September, there were signals that the government is now considering an outright ban of digital assets. Right now, all eyes are on India.
Due to the size of the market and richness of talent, given a hospitable regulatory environment, India can become the biggest hub of innovation with mass market adoption of blockchain and digital assets. It can set standards with a robust fintech ecosystem that is unmatched anywhere else in the world— attracting investors and entrepreneurs from home and abroad.
Blockchain, a shared peer-to-peer network that allows parties to make secure and instantaneous transactions without a middleman—is what bitcoin and other digital assets are built on. While there is mainstream understanding and acceptance of blockchain, there is still confusion about digital assets. However, digital assets work hand in hand with blockchain technology. While most can agree on the benefits blockchain can bring to different industries, digital assets also play a central role—especially when it comes to payments.
India, being the biggest “receive market”, is the dominant use-case for cross-border payments and remittances. For cross-border remittances, major pain points include the time it takes for the money to hit the bank account on the other side, and with the amount received at the final destination being less than expected due to foreign exchange rates and high transaction fees. In this scenario, blockchain technology and digital assets can be used to facilitate a fast, low-cost, and seamless remittance process. Not only can payments happen in real-time, but the savings that financial service providers received can be passed along to the consumer.
The path forward for India
While there are an immense number of use cases, the biggest barrier in implementing any new technology is a lack of understanding which can lead to distrust of its capabilities. We’re far beyond the days of Silk Road and scammy ICOs – the industry has come a long way as companies are building products that solve real world problems, gaining trust by demonstrating real utility. This is more the reason for government bodies to step in, to push bad actors out of the way, and ensure that consumers and businesses alike are protected.
With suggestions and inputs from both private and public sectors, Indian policymakers will be able to better navigate the path that leads to responsible innovation through adoption of blockchain technologies and digital assets. Ultimately, clear regulatory guidance will help Indian businesses, entrepreneurs, innovators, and consumers to benefit from digital assets in a safe and meaningful manner.
The writer is MD, South Asia and MENA at Ripple, a San Francisco-based blockchain technology company