By Murtuza Merchant
Tokens with non-fungible properties have exploded onto the scene in 2021 and attracted investors from around the world with their potential, transcending mere tokenism and unlocking far more value for all stakeholders.
Artists can use NFTs to discover prices that are not found in the few renowned auction houses operating today, whereas investors can cash out at any time on their purchased NFTs.
In addition to their flexibility, these digital assets are immutable, making them the best crypto assets on the market today.
With the emergence of numerous celebrities releasing NFTs, there has been an exponential increase in Indian interest in NFTs.
Amitabh Bachchan and Salman Khan are poised to launch their own collections, while cricketers like Dinesh Karthik have already released NFTs commemorating their matches.
Considering that Millennials and Gen-Z account for the bulk of the country’s crypto investor base of more than 100 million people, NFTs are sure to be popular.
Dileep Seinberg, Founder and CEO, Thinkchain, a Crypto, NFT, and Blockchain Consulting company says NFTs are primarily released by celebrities to either cash in on their legacy or by newcomers to earn a quick buck without having the fear of being accepted by the audience.
“There are some celebrities who have built around themselves a great life. They are looking to monetize on their legacy by launching their own NFTs. The others are fairly new to the industry and earlier they were dependent on some godfather or commercially driven studios and distribution network, where these artists barely received the worth of their efforts. With the advent of blockchain, it is possible to skip all the middle layers to reach an audience who can appreciate the work and reward buying their NFTs,” he says.
However, the near-term uncertainty surrounding crypto assets may dampen investor sentiments considering the often contradictory commentary emanating from the central authorities that govern all asset classes in the country. If private cryptocurrencies were banned, as is being considered by the RBI, it would affect the trading of NFTs and dim the otherwise bright prospects of this revolutionary asset class.
The Sugarland Founder and Lead Developer, Mia Ekta, says when the government bans or threatens regulations in any sector, celebrities and influencers tend to bring people together to voice their concerns to the government.
“NFTs have proven to be lucrative – and now are becoming a revenue-generating resource for millions of artists who have already joined ‘the NFT stream’, not to mention the future potential the space holds,” she says.
Aliasgar Merchant, a Developer Relations Engineer at Tendermint, says India’s film and artistic heritage goes back more than a century, allowing for a unique niche for NFTs to find in the global market. India’s rapid economic growth also provides additional opportunities for NFTs.
“Foreign investors favor India because of its talent pool and its price difference from other countries. For example, high-end-VFX films like ‘Koi Mil Gaya’ are produced at a cost three to four times less than Hollywood. Such a huge price difference can lure foreign investors to invest money in NFTs made locally,” Seinberg said. “The price difference is the most lucrative for foreign investors.”
It was scheduled to be tabled during the Winter Session of Parliament, which began on November 29, that the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 would be introduced. As the chorus around the legality of digital coins and how to protect investors’ money grew louder, the bill was not brought to the table — second time in a year.
Digital coins are being misused by terrorist organizations and drug trafficking organizations on the Dark Web. These coins are being used for money laundering and hawala transactions. This poses a serious threat to national security and challenges Indian security agencies.
A blanket ban on cryptocurrencies is being sought by the Reserve Bank of India (RBI), but the government seems to be unclear.
From “all windows on cryptocurrencies will not be closed” to “no proposal to recognise Bitcoin as currency”, and “regulating cryptocurrency will have to be a collective effort”, Finance Minister Nirmala Sitharaman and her team is yet to make up their mind as to how to deal with this emerging situation, especially at a time when several countries like China, Bangladesh, Russia, Egypt, Morocco, Qatar, Turkey and Vietnam have banned or prohibited/restricted cryptocurrencies.
Will India have a successful Crypto Bill next year after incorporating global knowledge into the bill’s clauses, as the government seeks?
Subhash Chandra Garg, former Finance Secretary of India and one of those who drafted the original Bill, said cryptocurrency assets (based on Blockchain technology in decentralized databases) and businesses are growing worldwide.
“India, though not quite deep into developing crypto platforms like Ethereum or in creating crypto-businesses, has acquired a fancy for crypto-assets of different types. This fascination started with Bitcoin and has now expanded to many other crypto-assets (loosely referred to as crypto-currencies),” Garg told said.
Garg sees this fascination continuing in 2022 as well.
“However, if crypto-asset prices crash, which is inevitable sooner or later, Indian investors might flee crypto-stables, but only after their noses get bruised,” he warned.
The International Data Corporation (IDC) predicts that global organizations will spend nearly $6.6 billion on Blockchain solutions this year, up more than 50 percent from 2020.
Within the forecast period of 2020-2024, blockchain spending is expected to continue to grow with a compound annual growth rate (CAGR) of 48 per cent, reaching nearly $19 billion in 2024.
According to a report from Juniper Research, deployment of Blockchain technology will result in significant cost savings for banks, increasing by 3,300 percent from $301 million in 2021 to $10 billion by 2030.
Industry-wise, banking leads the way in Blockchain spending, followed by process manufacturing and discrete manufacturing, as well as information technology and business services.
In the Blockchain-based financial world order, India has a crucial role to play because of its pool of tech talent and early adoption.
“Blockchain-cryptography technology is brilliant and full of promise and the businesses and assets being built thereon are quite valuable. However, there is no good way at present to assess the true value of crypto-assets and businesses. Present prices reflect the euphoria of this potential,” Garg noted.
“Indian entrepreneurs might also be able to unscramble this technology by then and start building good crypto-Blockchain technology service businesses. That would be the beginning of true crypto adoption in the country,” he added.
Amid the growing adoption around Blockchain, the cryptocurrency exchanges have recently mushroomed with deep business interests in mind.
According to experts, the government must not only ensure that investors’ money is safe, but also trace millions of dollars that have been routed via crypto exchanges and platforms that the relevant authorities have no clue about.
A media report said in November that over Rs 4,000 crore of illegal transactions via cryptocurrency exchanges have been unearthed by the Enforcement Directorate (ED) in the last one year.
“The crypto craze has reached Tier 2 and 3 towns and non-regulation of this market of Rs 6 lakh crore size is raising questions on the sovereign authority of the Government of India. Non-levy of GST in various layers of its transaction and non-imposition of income tax with penalty is already causing huge loss to the state and Central government’s revenues,” said New Delhi-based cyberlaw expert Virag Gupta.
The Indian government faces a tough road ahead on Crypto in 2022, and taking the right decision will have to be a collective one.
