India could leapfrog the early stages of development of a crypto-assets market the way it did during the mobile telephony revolution of the 1990s, Asha Jadeja Motwani, Indian American angel investor, and Silicon Valley-based philanthropist suggested to Finance Minister Nirmala Sitharaman.
Motwani met the finance minister at an interaction with woman CXOs in San Francisco last month.
Nirmala Sitharaman had visited California for four days after attending the World Bank Group summer meetings in Washington, DC, as part of her 10-day visit to the U.S. starting April 18.
At her meeting with Kristalina Georgieva, managing director of the International Monetary Fund (IMF), the minister had raised concerns about crypto assets. And earlier this year, India imposed a 30 percent tax on proceeds from cryptocurrency trades.
However, advocates of the new class of assets believe India should take the plunge and focus on regulating the trade rather than opposing it because, as Motwani put it, the horse has bolted from the stable. Venture capitalists invested a record $30 billion in crypto assets in 2021, according to PitchBook.
Motwani said she and Kirthiga Reddy, president, Athena Technology II, told the minister they were willing to be part of the conversation on how to regulate transactions in crypto assets.
“I told her thousands of Indian programmers are already on this new crypto Web 3.0,” she told indica. “Irrespective of what policy India promotes, accepts, or rectifies, the truth of the matter is that Indians are the core DNA of Web 3.0. So, I said it would be helpful to include a couple of people in her extended policy advisory team that can advise India on creating a regulatory framework around this.”
Motwani said the finance minister agreed with the suggestion and they met with her young team and chief economic adviser. “I am glad India sent somebody as empowered as her on an official U.S. visit,” she continued. “This sends a strong signal to Washington DC. While India has avoided voting against Russia on the war in Europe, we are still close friends with the U.S.”
On taxing crypto profits, Motwani said this is a different class of assets not connected with any state. “It is an independent entity that has evolved on its own,” she claimed. “Bitcoin and Ethereum are currencies unconnected with any nation-state.”
Motwani said, “This is an opportunity for India. Don’t slow down, don’t be fearful. Accept it, acknowledge it and work with it.”
She said the minister liked the thought. “We will work with her team to make sure we are in that loop,” she said.
On India coming up with its own digital currency, Motwani welcomed the idea but said the country is already a couple of years late in figuring out how to get a piece of the action.
“This is exactly like when the Indian government came up after the internet,” she said. “Similarly, in havening with crypto. India is coming up with a digital currency because it wants to be on a par with China on this whole conversation.”
She said it would be a good idea to have a digital currency tied to the Indian rupee. “I am confident, now that Nandan Nilekani, co-founder and chairman of Infosys Technologies and founding chairman of the Unique Identification Authority of India, and Balaji S Srinivasan, CTO of Coinbase, are involved with conversion and digital money and incorporating crypto in the India tax structure,” she said.
Asked if India has the infrastructure needed to set up a digital currency, with the looming threat of money laundering and digital theft and the concerns expressed by Sitharaman herself, Motwani said the country has the infrastructure and software houses that can build it if need be. She suggested that the country could also involve the Indian diaspora in the effort.
Sitharaman also hosted a conference in California on ‘Investing in India’s Digital Revolution’, where she interacted with tech companies and investors in Silicon Valley who are helping drive the digital revolution in India across sectors, including financial services, healthcare, education and energy.
Asked why India should go for a digital currency, Mukesh Aghi, president and chief executive officer of the U.S.-India Strategic Partnership Forum and a man with extensive experience of working with business and government leaders in the U.S. and India, said a central bank digital currency (CBDC) is the next step in the evolution of finance in India that started with the Jan Dhan-Aadhaar-Mobile (JAM) initiative and gained momentum with innovations like the United Payments Interface (UPI).
A well-designed CBDC digital rupee would be a solid foundation for new and existing payment systems and provide access to safe central bank money within India’s rapidly expanding digital economy, he said.
He said while the infrastructure and technology for such a currency exists, the Reserve Bank of India is still examining the policy and regulatory issues that could arise with the implementation of a CBDC, such as the impact upon financial markets and monetary policy transmission.