Q/Once government digital currency arrives, will cryptocurrencies decline?
A/One thing that everyone should understand and [over which] there is still a lot of confusion [is that] the two are independent. The CBDC is a digital version of the rupee on the blockchain, and crypto assets have different use cases. There is no competition, there is just a common underlying technology: blockchain. The two go hand in hand. In fact, as they become popular, the adoption of blockchain technology will also increase. If CBDC becomes popular, so will crypto.
Q/ After the budget announced a digital currency and learned about cryptocurrency with a 30% tax, is the glass half full or half empty?
A/It’s a great stage. At least there is no room for ambiguity. People weren’t clear and that was stopping a lot of investors from entering the market. At least now there is going to be normalization. But the 30% flat tax could push many retail customers who viewed crypto as a portfolio investment to relocate. Second, early tech adopters could change base – you could see a brain drain, with startups also leaving the country.
Globally, many countries are coming up with pro-crypto legislation, so they become crypto hubs and reap the benefits. But, if in India you are going to tax it at the same level as betting or gambling, it will affect the industry in the long run. Crypto is a new technology [that] can add a lot of value to the country’s GDP. Many innovations can result from this and this can create job opportunities. India can become a technological power, if you build the right political framework.
Q/ Do you think there is progress?
A/ Progress has been made. But we don’t have access to detailed information on what the government thinks. No one has seen the draft bill yet. We feel the government has become more open. But to what extent, no one has any idea.