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Interview: ‘Bitcoins will be used by sovereigns in the future’ – Rahul Pagidipati, ZebPay

Bitcoins could become the currency of the future as exchange rates weaken and local currencies depreciate over time, leading to people, institutions and even sovereigns using Bitcoins or other crypto-currencies as a means to settle payments internationally, said Rahul Pagidipati, chief executive officer of ZebPay, a leading crypto-currency exchange. This would mean that the US Dollar would be replaced by Bitcoins or other crypto-currencies as it becomes devalued over time as the world’s reserve currency.

In an interview with MediaNama, Pagidipati said that the time for an outright ban on crypto-currencies is over, and that the government should work with the industry to address specific regulatory concerns and encourage innovation.

The government announced that it would introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will ban “private” crypto-currencies while at the same time providing the Reserve Bank of India (RBI) with the requisite legal powers to develop a central bank-backed digital currency (CBDC), according to an official Lok Sabha Bulletin Part II for the Budget Session 2021 of Parliament. Since announcing the proposed legislation, the Finance Minister has clarified that the government will give investors a window to square their holdings and that a “calibrated” policy is being planned.

Edited excerpts from MediaNama’s interview with Rahul Pagidipati, chief executive officer and Vikram Rangala, chief marketing officer at ZebPay, follow.

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‘Countries are going to settle payments in Bitcoins’

“It is not that big of an innovation because, to me the rupee and the dollar are already digital, said Pagidipati. “Ideally, the RBI should make the proposed Digital Rupee or Central Bank-backed Digital Currency a hybrid currency similar to Facebook’s Libra or Diem. If they want to help create a decentralised Rupee, we’re all ears. We’d love to throw our technical know-how into it and we’ve been telling regulators that,” he said.

“In the long run, 10 years in the future, people around the world will have the right to own dollars, rupees, Bitcoin, or whatever. A US citizen might have 20% of his money in dollars, 20% in Bitcoin, like 10% in rupee and 10% into other stuff. There’s going to be four or five large currenciesin the world, the dollar, or maybe on other one, maybe the rupee will to get there too. But then if you’re not in the top four or five currencies, everyone else is going to be using Bitcoin. I believe the large countries will start transacting in Bitcoins.” — Rahul Pagidipati, CEO, ZebPay

Bitcoin could also be used for interbank payments, when in the future there will be 10-15 large global neo-banks out there, Pagidipati added.

‘People still feel the pain of 2008’

Whether it was the mortgage crisis that brought the global investment banks to its knees in 2007-08 or the LIBOR scandal in 2012, faith in the financial system broke, said Pagidipati. “I know some people inside the banking world and the impression I get is that they are still shaken by it. When you break faith with the essential trust that you need between the institutions, you need a replacement. It’s not something you can just fix incrementally by saying, okay, we’ll do some reforms,” he said.

“Look at who is now coming of age, who is the largest demographic on ZebPay, the are group that is most interested in crypto. It’s the kids who grew up watching the effect of the 2008 financial crisis on their parents. Things used to be so fun and free and then suddenly, something happened in their childhood. This is almost a cultural phenomenon, it’s shaping a generation. So they will never think of money the way that older generations do.” — Rahul Pagidipati, CEO, ZebPay

‘ZebPay could have been a billion dollar company’

Pagidipati and Rangala said that at the time of the Reserve Bank of India’s April 2018 circular, ZebPay had a 70% market share with millions of users. “We were well on the way towards becoming a billion dollar company. By now, we would have probably been closer to that or to a valuation similar to Paytm,” said Rangala.

“Coinbase recently announced that they’re doing an IPO. There’s no reason why an Indian company couldn’t be in a similar position with this gigantic user base and potential market. I think it (RBI circular) was a setback, but if that setback and now means that we’re looking at clarity, then all the better. With the latest remarks from the finance minister I think everybody feels encouraged because, she said specifically that we’re not going to go all in one direction” — Rahul Pagidipati, CEO, ZebPay

The duo said that India’s crypto-firms and blockchain companies could easily scale their services, if encouraged, eventually becoming unicorns in their own right. “We should talk about working together all the stakeholders,” Rangala added.

‘Would love to see a National Token Commission’

According to Pagidipati whenever new technologies or innovations come out, governments become worried in terms of their sovereign rights, monetary policy or fiscal policy or even capital controls. He said that ZebPay is in process of getting a license in Singapore, under the Monetary Authority of Singapore’s regulations for digital currencies.

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“The great thing about these things is that as money evolves and regulations come about, political structures also evolve. I would love for the government to create a Crypto-Token commission made up of politicians, academics and, entrepreneurs. The commission would issue warnings to investors looking to buy a token. The commission could also look into rating tokens based on their risk.” — Rahul Pagidipati, CEO, ZebPay

Under the regulations in Singapore, crypto-firms are instructed on what’s allowed, what’s not allowed, custodial services of funds, resolution processes, g financial statements, doing security audits, among other requirements, Pagidipati explained. “It requires companies to be legitimate and to not be fly by night operators. It’s a very important responsibility to hold onto to people’s financial assets, he said.

Given that the United States and India are two large democracies and both promote technology innovation, India can copy frameworks adopted in the United States for regulating crypto-currencies, Pagidipati said. “If the token is considered a security, then you need an exchange license similar to a broker’s license,” he said.

‘Industry should understand governments’ concerns’

Both Pagidipati and Rangala said that rather than give the Finance Minister a list of policy recommendations and suggestions, they would rather listen to the government and regulators on how best to safeguarded certain risks and concerns they may have.

Pagidipati said that they want to listen to the governments’ concerns about crypto-currencies and how the industry can solve certain issues themselves, like Ponzi schemes, capital controls, terrorism financing or others. “Let’s attack those problems one by one. Let’s really try to figure out what are the biggest issues, because I if we put our minds together, we can solve it,” he said.

We’re trying to be a social enterprise, we’re remaking our company in that direction, said Rangala. “Part of that is so that we’re not just thinking what’s good for ZebPay, but how can we be good for India? We’re just beginning. Crypto is just beginning in the world and is just beginning to be of service to India,” he said.

“If we can blend our technology with the needs that are out there, whether it’s a better information for farmers, whether it’s easier and cheaper and more reliable access to health insurance or other things where blockchain is something that can be used, we would like to be called upon by the government yo innovate in those spaces.” — Vikram Rangala, chief marketing officer, ZebPay


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.

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