Cryptocurrency finds more and more popularity by the day as a payment method. Not all businesses are willing to explore cryptocurrencies as a payment method for their goods and services. But a few takers are, nevertheless, there. In most cases, they are growing businesses and are placed in both, formal and informal sectors in India.
These businesses have begun to accept a range of crypto tokens, such as Solana, Etherium and Bitcoin for exchange of services and products. This development alone highlights the popularity of digital assets in India.
In this article, let us understand more about the usage and acceptance of payments made using cryptocurrencies in India.
There are a few cases wherein businesses define how cryptocurrencies are going to be used in their payment systems. Industry experts feel that businesses are trying to derive the maximum leverage from the hype over crypto tokens, which was created in the aftermath of the pandemic. But for some businesses, accepting cryptocurrencies for payments is merely a method to find a competitive advantage.
Before the crypto law was passed by the government of India in the parliament, there used to be no specific law that regulated the use of cryptocurrencies. During these times, legal experts would harbor the opinion that use of cryptocurrencies in India is not illegal, but it is not legal as well. So, when businesses or consumers intended to go ahead with crypto transactions, they would just go ahead with it.
Establishing Utility
Unocoin is the oldest crypto exchange in India. At Unocoin, users are permitted to recharge their Fastag accounts using Bitcoin. Bitcoin transactions are further permitted for eCommerce and bill payments.
Ever since Unocoin has gone live with Bitcoin topups for Fastag, merely in a matter of 2-3 weeks, it has seen transactions in the line of 8-10 lakhs. Among all people making these transactions, over 50% were 35 years of age or older. This information was shared by Sathvik Vishwanathan, Unocoin’s co-founder.
The exchange is looking to reinstate the original intent that stood behind the creation of Bitcoin. This intent was free and fast payments, which could be made irrespective of the part of the world that one is located in. A middleman would not be called for in such circumstances. Bitcoin had initially intended to span its use case for retail traders. As per industry estimates, there are currently 15 million retail traders in India.
Unocoin purchases Bitcoin from the users who opt for payments. Twice or thrice every week, they settle with partner vendors.
As per Vishwanath, Bitcoin, during those days used to be vastly perceived as an asset class. Its utility part was very much becoming sidelined. Vishwanath says that the exchange was looking at tapping into the widespread customer base with Fastag.
Raghav Gupta is the director of Rug Republic, which is an Indian brand selling home décor items. Mr. Gupta says that Rug Republic intended to highlight to the regulators that from the Indian business community, there is support for crypto.
Rug Republic was just one of the businesses that were looking forward to the enactment of favorable crypto laws on the behalf of the government. The company was presenting itself as a reliable business that had an interest in forwarding crypto transactions.
Mr. Gupta says that the government was going to come up with favorable crypto laws only when it sees that there are reliable businesses who favored crypto payments for their goods and services. Mr. Gupta is also a crypto investor in personal capacity and has recently joined his family’s export business. He further specifies that he had recently convinced his father to make crypto one of the payment options for their business which is eight years old.
At the time when crypto regulation laws had not been introduced, Mr. Gupta said that the government has recently assembled a body to take charge of crypto regulations. He was sure that if his organization and many other similar businesses adapted to crypto payments, then blockchain indeed would be the future.
Regulatory Arbitrage
The developments being mentioned here had come at a time when numerous jurisdictions from across the world were willing to allow Bitcoin to be use as a payment mode. These included the nation of El Salvador and the US city of Miami.
It is however noteworthy here that RBI has been vocal regarding its cryptocurrency related concerns. RBI had been particular on banning the usage of private crypto. On the other hand, the government has indicated that it prefers to classify crypto as an asset class, just the way gold is. This used to be the situation before the crypto bill was introduced in the parliament.
As per legal experts, there used to be a shortage of relevant statutes for cryptocurrency regulation during those days. This brings similarity between crypto transactions and barter deals. Herein, the acceptance is entirely at the recipients’ discretion.
As per Anu Monga, partner at Anant Law, at that time, cryptocurrency was only being accepted as payments by certain platforms across India. They included specific restaurants and eCommerce platforms that operated online. During that phase, dedicated cryptocurrency laws did not exist and the ban on cryptocurrency was also nonexistent. Cryptocurrencies, in India, used to come under a grey area.
Mathew Chacko, partner at Spice Route Legal finds himself in agreement. He further expressed that at that point, there was little to halt barter of this nature. An interesting policy question would arise at that time. Should we halt this – altogether – as a country? This came with an associated question. Was it going to be possible? All entities concerned with crypto, investors, traders, businesses, consumers, stakeholders, and legal entities were awaiting a response on the behalf of RBI.
As per Yash Vardhan Swami, a fitness trainer, crypto has become way too large to ignore in 2022. Swami perceives cryptocurrency as an automatic investment and something that captures his interest. But he is yet to do deep research on cryptocurrency. He, nevertheless, expresses that the buzz around cryptocurrency inspires him to invest in it. Swami is 26, and his clients from Ludhiana and Chandigarh pay for his services in cryptocurrencies. Beyond Etherium and Bitcoin, he also accepts payments in Dogecoin, Cardano and Polygon’s token.
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