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The Crypto bill can lead to creation of more meaningful crypto products

The crypto mania generated a kind of lure of easy money few other things could match. Overnight rises of 64,000% per cent are almost inconceivable and defy any logic of investment and growth. This, coupled with the ever-extending advisements from crypto exchanges started luring everyone to this crypto maze. Then came NFT cryptos. Everyone thought that their old photo could have many buyers and can be the asset that can make them rich. So, everyone assumed that everyone will invest in everything crypto – just say the word and let it be on an exchange.

Everyone was making loads of money. Or could smell money around them.

The crypto party was on and as participants kept joining the party, its music kept going louder and louder. So loud that some of the saner voices became too difficult to hear. Hardly few understood anything of what was happening or what the product was. All one had to do to make a lot of money was to start with some money.



All parties come to an end. The government allows parties to continue to a certain point and wants them to end by a certain timeline in every city. Something similar happened to this party too. The Government of India will be tabling a Crypto regulation bill in Parliament that is expected to ban all private cryptos. While not much is clear about the contents of the bill, prudent that the government did step in now. According to RBI, 70% of crypto investors have only invested less than Rs 3000 so far. So, we may have many people joining the party, they have not yet played big money at the roulette. This is a good time for the government to bring in some sanity and order to the market before it gets to the point when mass participation explodes further, and people begin investing significant amounts they cannot afford to lose.

The crypto bill envisages creating an enabling framework for a Central Bank Digital Currency, for the RBI to create the Crypto Rupee. The RBI has been consistent in its messages and warnings that it is not comfortable with cryptocurrencies and investors may lose all their invested capital. Crypto technology can enable a lot of good use products and solutions. What we saw so far was mainly a shallow use of the technology. The first tokens envisaged to become a replacement to fiat currency and therefore they were called cryptocurrencies. Later, they became highly traded only because of the trustless architecture of public blockchains underlying them. The latest crypto interest has been in NFTs or Non-Fungible Tokens that give you part ownership of any digital asset. People started creating 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 to more and more people joining the crypto party. Such investments were made with smaller amounts as people were testing waters. This created a new asset class and a need for serious consideration to the Digital Assets.

Since the Crypto bill was enlisted to be considered by the parliament, there is a significant amount of noise about how the ban on private Crypto tokens can be very regressive. The principal justification was how the country may be deprived of the benefits of the underlying BlockChain technologies. This is not true though. Much of the crypto limelight has been hogged by those who have a vested interest in promoting the current crypto tokens. However, the same crypto technology can be used to create many crypto products and solutions that can enable some real useful purpose.

The Crypto bill also envisages an enabling room for certain exceptions to the ban to “promote the underlying technology of cryptocurrency and its uses”. This small but significant enabling provision can lead to new kinds of cryptos that may survive the ban. Such tokens can represent true ownership of real assets (like art, real estate etc.) or may represent a beneficial interest in an income stream (like investing in a Solar farm to produce electricity).

In our own case at RealX, we had created a legal model for digital co-ownership of properties with co-ownership information maintained on PropChain (our BlockChain solution). However, we believed until the government brings in more clarity on proper definition and recognition for Digital Assets, it may be risky to Tokenise Real Estate, despite being ready with the technology to do so. With an RBI issued CBDC, we can usher into a very different transaction ecosystem with near-immediate payments and settlement of such transactions even in assets like Real Estate.

There can be many more applications that may be fostered in a more structured and clearer environment that may follow the Crypto bill. The crypto exchanges may lose trading of many of the older tokens that may get banned. However, the silver lining is that they may shift to trading in the tokens that may get more legitimacy once the bill is cleared.

The technology is here to stay. The shift to meaningful tokens may only be for the better.

(Manish Kumar and Neera Imandar are Co-founders of RealX, a blockchain based platform for fractional ownership of Properties. They both also Co-Chair the South Asia chapter of a Global Impact Fintech (GIFT) a global thinktank organisation of Fintech and Financial Inclusion.)

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