Nandan Nilekani said he supports regulating crypto-currencies as financial assets. During a conversation on the Clubhouse app on Monday evening, the non-executive chairman of Infosys and the chief architect of the Aadhaar program suggested that the government’s proposed digital currency can sit on a parallel rail on the Unified Payments Interface (UPI).
“We should think of crypto as an asset class and allow people to have some crypto. Crypto as a transaction medium will not work as fast as UPI, which is targeting a billion transactions a day. But crypto has enormous capital,” Nilekani said. MediaNama attended the Clubhouse call, which was not public.
“There is no question that Indians have already started using the underlying technology of Bitcoin, which is blockchain…I do not think we can offer crypto-currencies as a transaction medium, it won’t compare in performance with UPI for many years…As Indians become more comfortable with cryptos as an asset class, we will make the steps to allow people have some holdings in cryptos as long as they declare them. This will have to be done in a very structured manner, the debate will happen.”—Nandan Nilekani
He said that while the government and regulators were looking at developing a Central Bank Digital Currency or CBDC in the next two-three years years, a private stablecoin would not be required since a Digital Rupee would be enough.
“If MSMEs need capital and if we can say that the capital in the crypto-world, which is $0.5 to $1 trillion, if that is made accesible to MSMEs and if they can get that capital to grow then we have an argument. Similarly, if people can get the benefit of crypto in their individual [capacity], like in remittances, we have to frame this in terms of the benefits to Indians and for Indian companies.” — Nandan Nilekani
It is important to note that UPI was developed by the Indian Software Products Industry Round Table or iSpirt, the Bengaluru-based software think-tank. Nilekani has been mentoring the community of “volunteers” that work with iSpirt on developing digital platforms as part of the India Stack project. The think-tank is working on a crypto stack, which will be revealed soon.
Other participants in the Clubhouse discussion included angel investor and entrepreneur Balaji Srinivasan and Karthik Reddy of Blume Ventures. The discussion was organised by the Indian VC fund.
Due to the regulatory uncertainty, crypto has stopped compounding in India, said Srinivasan.
“India has actually executed very well on its domestic stack and so as Nandan said, I think the Digital Rupee is actually going to be pretty good. What would work is for access to all this international capital, which we are all aligned on that there is a lot of in this crypto economy, for MSMEs to be able to get equity or loans from all these crypto capitalists online. You need regulatory clarity, you need people to know that it is not going to get banned and that it’s going to be regulated” — Balaji Srinivasan
MediaNama has prepared a guide on crypto-currency regulations in India, listing the government’s position over the last few years and various policy recommendations; read it here: A complete low-down on crypto-currency regulation in India.
- Interview: ‘Bitcoins will be used by sovereigns in the future’ – Rahul Pagidipati, ZebPay
- ‘Government has signaled a middle ground approach to crypto-currencies’ say founders of Giottus
- NPCI creating open-source platform for UPI, says Nandan Nilekani
- Indian blockchain firm Polygon looks to save crypto-universe’s network woes