What is the State of Crypto in India? Regulatory Concerns, RBI Commentary, and Shardeum

With a population estimated around 1.4billion, India rivals China as the most populated nation in the world.  As a result, any regulations or industry developments within the country pertaining to the digital asset sector have the ability to affect the market greatly.  The following are a few tidbits from recent days involving India, highlighting the current sentiment surrounding the sector.

Into the Cryptoverse Report

A new report, put together by digital asset exchange Kucoin, has shed light on consumer sentiment around digital assets in India.  Titled, ‘Into the Cryptoverse: Decoding the World of Crypto Consumer – India Edition’, this report was generated from a poll of over 2000 Indians between 18-60yrs of age.

It begins by stating that, “The crypto space in India has been witnessing a revolution in the past couple of years. Despite the ambiguity in regulations and extreme volatility, young Indian investors  refer to buy crypto as assets over gold. According to reports, the Indian crypto market is expected to reach US$241 million by 2030.”  

Interestingly, the rationality fueling most polled investors is not centered around buying ‘lambos’.  Rather the number one driving force is a desire to ‘improve their families’ living conditions’.

The following are a few metrics shared within the report.  KuCoin states that,

• 56% of crypto investors believe crypto is the future of finance
• 54% believe crypto will bring them a higher return on investment in the long run,
• 52% invest in crypto to gain passive income and improve the quality of living.
• Only 24% of young investors consider crypto a hype for fun
• 43% are going for the short-term gains.

Overall, despite the Reserve Bank of India (RBI) doing its best to stymie further adoption of the sector, a fair amount of optimism surrounding digital assets remains.  While one third of those polled may be worried about regulations, this fear has not been enough to prevent 115 million (and growing) from dipping their toes in the sector.

The RBI’s Perspective

In stark contrast to the aforementioned report put together by KuCoin, Shaktikanta Das, Governor of the RBI, recently commented on the banks success in dissuading Indians from getting involved with digital assets.  However, with over 115 million believed to already have invested however, it is hard to gauge is this is indeed true.

While the RBI is notoriously be anti-crypto, having done its best to limit adoption through imposing bans over the years on banks and payment processors from dealing with such assets, it states that it is ‘always supportive of innovation’, as long as the innovation is ‘orderly’. This support can be seen through its development, and anticipated release of a digital rupee, structured as a central bank digital currency or ‘CBDC’.  While there is no firm date for when such a product would be released, it is believed that such an event could occur before 2022 comes to a close.

Shardeum

WazirX was/is one of the most popular India-based digital asset exchanges.  Unfortunately for the platform, it was recently subjected to a probe by India’s Enforcement Directorate (ED), stemming from accusations of money-laundering involving its top brass.  Now, news has broken that Nischal Shetty, cofounder of WazirX, is looking to start anew with another company known as ‘Shardeum’.

The company, which has set a goal of solving the decentralization, security, and scalability issues that plague most blockchains, is believed to have attracted the attention of various investors.  The round is believed to be worth between $20M-30M, and would give the company a valuation of roughly $200M.  If successful, Shardeum hopes to launch its mainnet later this year, with its target audience being primarily Indian citizens.

The name Shardeum comes from a process known as ‘Sharding’.  This is notably one of the major upgrades scheduled to hit the Ethereum network when it undergoes ‘The Merge’ later this year.  The process allows for higher throughout when compared to traditional methods, resulting in lower fees, easy node operation, and a variety of other benefits.