Cryptocurrencies have been a hot topic for discussion across the globe after U.S. President-elect Donald Trump voiced his support for a crypto-friendly economy. Trump’s ideology to adapt toward digital currencies and blockchain may further shape international financial systems. However, the question is: How do US crypto-friendly policies impact India?
Will India benefit from these changes, or will they pose a challenge to its existing financial systems?
In most of his speeches and his political campaigns, Donald Trump has already campaigned on the prospects of cryptocurrencies in revolutionizing an economy. He calls for restrictions on crypto usage to be kept to an absolute minimum so that people and businesses are able to make transactions everywhere in the world. Trump says that blockchain will help financial systems become more efficient, transparent and decentralized.
This vision has resonated with tech-savvy economic and social milieus ready to bring their ground into digital transformation. However, for countries like India, the regulation of cryptocurrency is still in the grey area-such a vision may deliver a mixed outcome.
India has one rollercoaster kind of relationship with cryptocurrencies. The country had all the makings of a thriving tech community and has spawned a swarm of blockchain startups. On the other hand, it kept caution about crypto from the government side.
While the recent past has seen a constant rise in interest in digital currencies in India, millions of users and investors hopped onto the crypto bandwagon, regulatory uncertainty kept the market in flux. The RBI had banned banks from supporting cryptocurrency transactions in 2018.
The Supreme Court overthrew this ban in 2020, and the rhetoric continues to rage about how this new sector should be regulated. The government is afraid of money laundering, tax evasion, and instability in the financial sector. At the same time, however, comes a possibility of innovation and growth through it.
If Trump’s vision of a crypto-friendly economy gains traction globally, India could be in a prime position to benefit. Here’s how:
As the world is probably going to witness changes within finance, healthcare, and supply chain management sectors due to blockchain technology and cryptocurrencies, the revival of a crypto-friendly global economy driven by Trump offers new grounds for Indian startups to innovate and compete globally.
It can bode well and work in favour of spurring jobs, improving infrastructure, and access to technology only if there's a change in global policy in favor of crypto-friendly policies by receiving foreign investment flow into India's digital economy.
The flow of cryptocurrencies will bridge the gap for the unbanked population of India and, through digital wallets and decentralized systems, will enable them to access banking facilities. Thus, in this aspect too, it can be said that it meets the movement by India toward a cashless economy.
The dream of Indian enterprises of a simple and deconcentrated financial sector would help them in fast, cheaper cross-border transactions, particularly for SMEs looking to expand internationally.
While exciting, this major challenge that India faces before it can enjoy the fruits of being a crypto-friendly economy is:
Notably, India still lacks proper regulatory bodies regarding cryptocurrencies. A global push for crypto adoption may pressure Indian policymakers to craft comprehensive laws, a task which would require very delicate balancing and not stifle innovation.
The decentralized nature of cryptocurrencies poses exposure to cyber-attacks, fraud, and misuse. India will need public awareness campaigns and effective cybersecurity measures to handle such issues.
It will also usher in a much-needed threat to the traditional banking system and monetary policies. The government and financial institutions will complement each other's move and keep perfect economic stability in place. Considering the hype over new digital currencies, people in large numbers have not been that excited about them. For this, education and transparency in policies would help to overcome the scepticism.
India’s response to Trump’s vision of a crypto-friendly economy will depend on how quickly and effectively it can address these challenges. Policymakers would have to strike a fragile balance between innovation-supporting policies and security and stability. A clear regulatory framework, coupled with efforts toward blockchain education and investment, might catapult India into the global crypto revolution leadership ranks. Indeed, as this country becomes more crypto-inclusive, it will also learn some lessons in terms of collaboration with international partners.
Exciting opportunities lie ahead for India under the crypto-friendly vision without its hurdles-but it will undoubtedly transform the digital economy in the country while attracting investment and promoting better financial inclusion. On the other hand, it may someday bring about conditions that outweigh all the positive aspects of beneficial benefits.
As the world edges ever closer towards a completely digital financial revolution, the question for India isn't whether she'll gain from Trump's vision but if India is ready to leap into this crypto-driven future. That answer lies in the preparedness of the country towards the opportunities and challenges awaiting it.