Any new technology, regardless of its pioneering features, has to adopt the rules and regulations in every country before it can create a substantial impact on numerous sectors. Blockchain is no exception. Currently, Bitcoin, one of the most well-known applications based on blockchain, has attracted great attention, but countries worldwide see this cryptocurrency in different ways, leading to different blockchain regulation in India in specific and every country in general.
According to the BBVA report (1), countries such as Brazil, Canada, the United States and many European nations at least allow Bitcoin applications. Others such as China and India have a mixed relationship with bitcoin, while some countries, including Russia, are outright hostile.
India has long been regarded as one of the most favourable environments for technology startups. EY’s 14th biannual Global Capital Confidence Barometer (CCB) – Technology report (2) has listed India as the third tech investment destinations globally. So, how about this nation’s attitude towards such innovative technology – blockchain?
According to PwC’s FinTech Trend Report India 2017, a government push for financial inclusion, digitization and startup activity has led to the introduction of policy initiatives which provide a strong foundation to the FinTech sector in India (3). Thanks to this proactive support from the government regarding the policy, FinTech, which relies heavily on blockchain, in general has led the way for mainstream acceptance of the technology.
Moreover, startups in India are supported via various programs including Startup India program which was recently launched by the central government. This program aims to simplify regulatory processes, tax exemptions, patent reforms, mentorship opportunities and increased government funding. Despite significant reductions in incoming global investments in the FinTech space, the India opportunity remains promising.
As a result of favorable blockchain regulation in India, a lot of Indian players have tested the usage of blockchain in such sectors as finance, cross-border payment, supply chain, insurance, KYC (Know Your Customer) process and so on. Some of the Indian banks, business conglomerates, and one stock exchange are among the pioneers for exploring blockchain in India.
Organizations are actively employing blockchain to provide solutions to problems of cost, efficiency, security and transparency. For example, Stellar, India’s leading professional data recovery service company, has partnered with four financial institutions to enable low-cost global money transfers to the Philippines and cross-border payments to and from India, Europe, Kenya, Ghana and Nigeria. Deloitte India is also working on a pilot on blockchain based rewards and recognition program (4).
Blockchain as a basic technology is fundamentally beneficial to any system thanks to its decentralized, transparent system. Therefore, there is no reason for India government to bring in a tight blockchain regulation for this innovative technology. Cryptocurrencies, however, are different. India’s government has reportedly completed work on a proposal that outlines possible steps for regulating cryptocurrencies (5). Moreover, soaring bitcoin prices have now caught the attention of India’s income tax department. Tax officials may take a closer look on those who profited from the recent boom but skipped paying taxes on the money they made.
On the other hand, it is estimated that 80% of economic transactions in India still happen through cash, as opposed to around 21% for developed economies. Blockchain may make disruptive changes to contribute to a faster, more secure, transparent and cost-saving payment system in this 1.3-billion market.
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