Could India's Remittance Sector Pave The Way For Crypto Adoption?

The historic judgement by the Supreme Court of India in March this year overturned the banking ban imposed by the Indian Central Bank RBI. The decision brought a lease of new life into the Indian crypto ecosystem where many were living in uncertainty for almost two years. The Supreme Court hearing not only helped the very few existing crypto startups and exchanges but also paved the path for many other entrepreneurs who were looking to start a crypto business outside India.

The overruling of banking ban helped exchanges to make it easier for customers to invest in cryptocurrencies by adding direct bank transfers and INR support. And the effect of the decision is visible today during the pandemic and countrywide lockdown where Indian exchanges have reported a 400% surge in trading volume.

The timely intervention by the supreme court surely helped the Indian ecosystem to come to the mainstream with several big firms like Binance, OKEx, Ripple and many more investing in Indian crypto startups. However, despite this boost, the Indian government still seems a bit passive towards the digital assets as rumours of a "parliamentary note" issued by the Finance Ministry asking for a blanket ban was the talk of the town only a couple of weeks ago.

Indian IT and Remittance Industry Could Further The Adoption

India is known as the IT outsourcing capital of the world and contributes 7.7% of India's GDP and as per NASSCOM, the IT sector generated revenue of $180 billion in 2019. Given the rising demand for blockchain developers, smart contract developers and many similar IT needs of the decentralized space, India can not only add to the adoption cause but also help in building better solutions of tomorrow.

Even today, Indian crypto ecosystem has been representing the country's potential in the decentralized space despite the uncertainty over its regulations. Some of the prime examples of Indian crypto startups which have had quite an impact in the decentralized space include

Matic: a blockchain scalability solution provider focused on Ethereum blockchain.

WazirX: Indian crypto exchange which was recently acquired by Binance.

CoinDCX: Indian crypto exchange offering derivatives trading and also recently launched a blockchain learning platform.

Apart from these well-established exchanges and firms, there are numerous developers, content creators who work freelance for other firms due to the absence of awareness and well-regulated market. Regulations would not only help develop the crypto ecosystem but also lure more people to the ecosystem and offer a chance to these freelancers to working on native projects full time.

Apart from the IT sector, cryptocurrencies could also find a huge adoption through remittance services in the form of a medium of transfer and has a great potential given India is the world’s largest population outflow country, with more than 17 million immigrants in 2019. This means a large population of the country make use of remmitance services which comes at a cost at the moment.

As per a recent study conducted by OKEx and Coinpeprika, the global market share for crypto transactions would increase significantly from India in 2020-2022. The amount of remittance by Indians is the highest in the world.

Ripple, one of the biggest names in the remittance sector which utilizes XRP ledger to facilitate cheap cross-border transactions sees India as a crucial market and has already partnered with several Indian banks and enterprise. The use of crypto for remittance is growing in trend across the globe and India with one of the largest migrant population with the highest remittances value could be the next big crypto remittance market.

Cryptoknowmics got in touch with Siddharth Sogani, CEO of Crebaco, a blockchain analytics firm to get his views on what India needs to possibly capture the growing crypto remittance. Sogani explained,

"India has evolved on its digital payment sector since the demonetization happened. We saw the emergence of several payment gateways and many got funded as well. We Indians have learnt to transact using digital payments and QR Codes now.

Crypto is nothing else but a digital payment method for the user, yes on the backend, it uses several technologies.

Total transaction value using Digital Payments is currently around US$69m so far. And is growing at a growth rate of approx. 20% hence looking at this, we should reach US$141m+ by 2024 in this segment. Currently crypto has 5.5 Million users in India, doubling almost every 6 months, so I am sure that many will now think of entering the Indian market having crypto also as one of the payment options.

The only problem of getting Crypto for micropayments is when NPCI approves crypto for settling transactions through various payment gateways. If India regulates crypto, NPCI will have to work on the payment side of it."

The Indian government needs to look at the big picture and how other countries despite their initial reservations have realized that futures lie in fintech. While the government's concern to protect its citizen is understandable, it should not come at a cost of missing out in a global race despite having potential and resources.