‘India can pip others in cryptocurrency by adding it to UPI, Aadhaar’
In a pair of “companion articles” published on Saturday, Balaji and an Ispirt team of experts advocated that adding crypto to IndiaStack could potentially solve for oversight risks in regulating such transactions, while also opening India up for billions in investments and yielding “soft power” over smaller nations building crypto solutions.
“India could champion an aligned movement, a Decentralised Movement, where countries were economically aligned behind decentralised crypto protocols like Bitcoin and Ethereum that all of them benefit from but none of them control,” Balaji, who is also a former general partner at VC firm Andreessen Horowitz, said.
“The NationStack concept is a long-term vision for India to help every country gradually replace services managed by American and Chinese corporations with locally-operated tech platforms and national digital currencies,” Balaji said, referring to a concept presentation published by the Indian Software Products Industry Round Table (Ispirt) on Saturday.
Ispirt, which is credited to have built IndiaStack—a uniform software platform that allows governments and businesses in India to access rails such as Aadhaar, Digi-locker and UPI—in a separate blogspot said that a public crypto rail on IndiaStack can help bridge “India’s SME financing gap” by helping small businesses and startups access a new form of collateralised capital.
“Indian startups could benefit from crypto crowdfunding, Indian SMEs could access global defi lending pools, and Indian students might even be funded with the emerging concept of personal tokens, like an equity-based version of microfinance,” the Ispirt note said, adding that Indian government must give “serious considerations” to Balaji’s ideas.
“Balaji’s proposals have technical and social support from the very class of investors we would seek to attract. At least insofar as they relate to the issue of plugging the SME financing gap, we believe they deserve serious consideration by policymakers in India,” the Ispirt blog said.
Several eminent cryptocurrency and technology experts, most notably former chairman of Infosys and architect of India’s Aadhaar project Nandan Nilekani, took to social media to endorse the concept of India’s national crypto stack. Interestingly, this comes at a time when India is on the verge of banning cryptocurrencies including bitcoin for retail traders.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is based on the recommendations of a parliamentary committee headed by former finance secretary Subash Garg.
The bill is expected to criminalise not just trading but holding cryptocurrency assets as well, much to the dismay of the nascent crypto industry in India, which in recent months have gained traction riding Bitcoin’s bull rally.
India, taking a leaf from China, is developing its own digital coin backed by sovereign reserves as an alternative to paper currency. An internal RBI committee is learnt to be studying the possibility.
“This is a vision of national software stacks and neutral crypto protocols. Put another way, by adding both a digital rupee and cryptocurrency support to IndiaStack, the country would (a) run a permissioned ledger for domestic transactions via the digital rupee and (b) use decentralised ledgers for international affairs,” according to Balaji.
“That would give India the best of both worlds: a domestic digital currency fully controlled by the Reserve Bank of India (RBI), and international payments capability that isn’t controlled by any other country at either the currency or platform levels.”