Crypto Bill: The Get-Rich-Quick Crypto Wave May Lead to More Meaningful Crypto Products

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The crypto craze generated a kind of easy money bait that few other things could match. Overnight increases of 64,000% percent are almost inconceivable and defy investment and growth logic. This, coupled with the ever-changing advice from crypto exchanges, has started to draw everyone into this crypto maze. Then came the NFT cryptos. Everyone believed that their old photo could have many buyers and could be the asset that could make them rich. So everyone assumed everyone would invest in anything crypto – just say the word and let it be on an exchange.

Everyone was making a lot of money. Or could smell the money around them.

The crypto party was on and as the attendees continued to join in the fun, its music kept going louder and louder. So loud that some of the healthiest voices have become too hard to hear. Few people understood anything of what was going on or what the product was. All you had to do to make a lot of money was to start with a little bit of money.

All the holidays are over. The government allows parties to continue to a certain point and wants them to end within a certain time in each city. Something similar happened at this holiday too. The Indian government will table a crypto regulation bill in parliament that is expected to ban all private cryptos. While the content of the bill is unclear, it is prudent for the government to step in now. According to RBI, 70% of crypto investors so far have only invested less than Rs 3000. So we may have a lot of people joining the party, they haven’t played a lot of money yet. roulette. Now is the right time for the government to put some common sense and order back into the market before it reaches the point where mass participation explodes further and people start investing large sums of money in the market. ‘they can’t afford to lose.

The Crypto Bill contemplates creating an enabling framework for a central bank digital currency, allowing the RBI to create the crypto rupee. The RBI has been consistent in their messages and warnings that they are uncomfortable with cryptocurrencies and investors can lose all of their invested capital. Crypto technology can enable many products and solutions to be put to good use. What we’ve seen so far has been mostly superficial use of technology. The first tokens envisioned replacing fiat money and therefore were called cryptocurrencies. They later became widely traded purely because of the trustless architecture of the public blockchains that underpin them. The latest crypto interest is in NFTs or non-fungible tokens which give you partial ownership of any digital asset. People started to create NFTs of photos, collectibles, memes, etc.

Much of the crypto tokens created and traded were fun cryptos that people had fun investing in with small amounts, leading more and more people to join the crypto party. Such investments were made with smaller amounts as people tested the waters. This has created a new asset class and a need to seriously consider digital assets.

Since the Crypto Bill was drafted for consideration by Parliament, there has been a lot of noise about how the ban on private Crypto tokens can be very regressive. The main rationale was how the country can be deprived of the benefits of the underlying BlockChain technologies. This is not true however. Much of the crypto spotlight has been captured by those with a vested interest in promoting current crypto tokens. However, the same cryptographic technology can be used to create many cryptographic products and solutions that can achieve a really useful purpose.

The Crypto Bill also provides leeway for certain exceptions to the ban on “promoting the underlying technology of cryptocurrency and its uses”. This small but important enabling provision may lead to new types of crypto that could survive the ban. Such tokens can represent beneficial ownership of real assets (like art, real estate, etc.) or can represent a beneficial interest in an income stream (like investing in a solar farm to generate electricity) .

In our own case at RealX, we had created a digital property co-ownership legal model with co-ownership information kept on PropChain (our BlockChain solution). However, we thought that until the government brings more clarity on the proper definition and recognition of digital assets, it could be risky for Tokenise Real Estate, despite being ready with the technology to do so. With a CBDC issued by RBI, we can usher in a very different transaction ecosystem with almost immediate payments and settlement of those transactions, even in assets such as real estate.

There can be a lot more apps that can be promoted in a more structured and clearer environment that can keep up with the Crypto Bill. Crypto exchanges can lose the trade of many older tokens which can be banned. However, the silver lining is that they can switch to token trading which can gain more legitimacy once the bill is paid.

Technology is here to stay. The shift to meaningful tokens may only be for the best.

(This article is co-authored by Neera Inamdar. Both are co-founders of RealX, a blockchain-based platform for fractional ownership of properties. They also co-chair the South Asia chapter of a Global Impact. Fintech (GIFT), a global think tank organization of FinTech and Financial Inclusion.)

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