"The launch of a central bank-regulated digital currency in India could well mark a watershed moment".
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India’s Finance Minister Nirmala Sitharaman has announced in the2022 Union Budget 2022 the Reserve Bank of India (RBI) will issue digital currency based on blockchain technology in 2022-2023.
The decision to leverage blockchain technology by the government and create digital rupee may give an impetus to cryptocurrency exchange platforms and related companies that operate in India, according to analysts.
"India, like many other countries, has come to the sensible conclusion that you cannot ban cryptocurrencies. It would have been a futile and backward-looking decision to do so," says Nigel Green, CEO of deVere Group.
Ajay Kumar Thalluri, Business Fundamentals Analyst at GlobalData, says the launch of a central bank-regulated digital currency in India could well mark a watershed moment that may encourage companies in the private space to increase hires around the emerging Web 3.0 technology.
Polygon - an Ehtereum layer-two ecosystem - is perhaps the most well known and widely adopted Web 3.0 and DeFi name to come out of India.
“Currently, most job listings in India are around supporting software operations to maintaining software infrastructure while some companies are looking to build partnerships and create the compliance framework," says Thalluri.
deVere Group's Green says recognition of digital currencies by India - the world’s second most populous country and the world’s largest democracy - is a landmark moment for cryptocurrencies.
“The clarity will further shore-up the crypto space and help drive prices," says Green, adding:
"I’m confident that history will show that this is the first step to India adopting Bitcoin as legal tender in the future. It remains a long way off, but it’s certainly a step in that direction."
Thalluri says the likes of Coinbase Global Inc, BitGo, Inc., and PayPal Holdings Inc, among others, are already hiring in India.
BitGo and Coinbase listed roles as recent as January 2022 to recruit and build a team of engineers in India.
Similarly, PayPal is hiring for software engineer roles for its blockchain, crypto and digital currencies (BCDC) business unit to drive continued growth.
“Interestingly, Seychelles-based OKEX Technology Co Ltd is looking to manage and enhance relationships with local crypto influencers to identify potential affiliates and acquire users, ‘Affiliate Business Development Manager’ role listed in January 2022 shows. Another exchange network company, Ripple Labs Inc is building crypto compliance, among others, to support a global payments business. The company is growing its team of engineers,” says Thalluri.
The RBI will launch its digital currency in the year starting April 1, Finance Minister Nirmala Sitharaman said in her budget speech on Tuesday.
India will also plan to tax the income from the transfer of virtual assets at 30%, she said, effectively removing uncertainties about the legal status of such transactions.
“Imposing the tax rate makes crypto trading official now and any concern of a ban is off the table,” said Darshan Bathija, co-founder and chief executive officer of Vauld.
But he adds the relatively high tax rate could prompt traders to move to platforms in other countries, which would reduce revenue for the Indian government.