Covid19 Tech Impact
Latest updates & innovations, in-depth resources, live webinars and guides to help businesses navigate through the impact of the COVID19 pandemic on India's economy.
The Indian government may not have paid heed to the calls for regulation in crypto from the industry, but that has not stopped the crypto community from rallying together to support the government and the country amid the ongoing Covid crisis.
It all started with a clarion call from crypto startup Polygon’s cofounder and COO Sandeep Nailwal when he tweeted last Saturday (April 24): “Can’t take this sitting down anymore, I am going to run a Covid relief campaign in lieu of what’s going on in India. Need help from the Global crypto community. I will take full responsibility for transparency, funds usage and regulatory compliance.”
He said that while the logistics of the funds have not been thought through completely yet, the aim is to use the money to vaccinate half a million of India’s underprivileged youth. That will mean that he needs to raise funds in the range of INR 30 Cr (considering Covishield will be priced at INR 600 at private hospitals) to INR 60 Cr.
Though it might sound like a tall task, $2.5 Mn (over INR 18.6 Cr at current conversion rates) was collected through the mission only in the first 40 hours, according to Nailwal. Even as the movement gains momentum among the global community, top names in the crypto world have already committed huge amounts of money in cryptocurrencies.
Noted crypto evangelist and former Coinbase CTO Balaji Srinivasan was among the first global voices to lend support with a commitment of up to $100K in crypto. Soon, Vitalik Buterin, cofounder of Ehtereum, the blockchain that supports Ether, the second largest cryptocurrency by market capitalisation, joined the effort as he posted a proof of transfer of 100 ETH and 100 MKR, worth approximately $606,110 — approximately INR 4.5 Cr at current conversion rates — towards Covid relief measures in the country.
Then came Coinbase product head Surojit Chatterjee followed with a donation of $50K in Ethereum and 100K from Hubspot cofounder Dharmesh Shah. Commitments by task management startup Notion’s COO, Akshay Kothari, and Metakovan, the buyer of Everydays by Beeple, the first digital art auctioned through non-fungible tokens (NFT), also followed.
But there are obviously a couple of problems when it comes to crypto donations. Firstly, only NGOs with a certification of complying with the Foreign Contribution Regulation Act (FCRA) can pool in money from abroad for social work in the country. And then of course there is the issue of crypto not being a legal tender in India much like elsewhere in the world.
That’s why the contributions will be converted into a fiat currency in crypto exchanges abroad and then the funds will be transferred to an FCRA-certified organisation in India. This would also hold for donations made through crypto exchanges and wallets in India such as WazirX.
WazirX founder and CEO Nischal Shetty said “Of course, everything will be done by the book in a legal way. However, it also again highlights the need for crypto regulation to be put in place so that there are not so many barriers.” Shetty’s company has also individually committed INR 8 Cr in fiat currency to help ease Covid pain in the country.
Will Supporting Covid Crisis Legitimise Crypto Industry?
Meanwhile, as the crypto community joins forces to help the country in its moment of despair, political leaders are still dilly-dallying on framing laws to enable free buying, selling and building innovative financial products on top of crypto. There are reports in the media every few days of an imminent ban on virtual currencies or a law being enacted that will effectively lead to the shut down of numerous crypto startups.
Yet, crypto enthusiasts are not giving up hope. Earlier this month, prominent voices threw their weight behind crypto and its many possibilities in India. For instance, Balaji Srinivasan laid out in detail many of the use cases of integrating crypto with India Stack, the software layer that has made possible innovations such as the United Payments Interface (UPI), Aadhaar, DigiLocker, eKYC and more.
Another exciting idea that has come up is using the $2 Tn pool of global crypto wealth to solve the massive scarcity of credit faced by small businesses in India. Nandan Nilekani, non-executive chairman of IT giant Infosys and the architect of India’s Aadhaar programme, has tweeted in support, saying: “How does India become a $5 Tn economy? We’ll need to close the $250 Bn financing gap for India’s small businesses by attracting global, risk-tolerant pools of capital — and as iSPIRT details, the rapidly growing crypto economy may be one of the key ways.”
But that is still a dreamy future for now. At present, Nailwal’s focus is on how best to utilise the crypto community’s contribution in dealing with the Covid crisis. When he speaks about the various options like buying oxygen concentrators or cylinders, it sounds like he is still performing a mental calculation of the optimum measure.
“Oxygen is a huge crisis but it would probably be solved in the next 15-20 days. Maybe, it would be better to take a more long term view. And vaccinating those who can’t afford it might be the best way forward,” he mutters. Perhaps, once the country is through the Covid crisis, the government too should take a long-term view on crypto. How can it desert those who stepped in to help the country when everything seemed to be falling apart? Maybe, it is time the centre stops holding the crypto cards close to its chest.