“There is a role for crypto as assets but they obviously will have to follow all the laws and make sure that it doesn’t become a backdoor for money laundering … they have to use that [as] an entry point to get lot of young people into financial markets,” said Nilekani, who co-founded Infosys, India’s No.2 IT company in 1981.
Crypto is not suitable for transactions because of its high transaction costs and volatility, added Nilekani, a well-networked technocrat who also played a key role in creating India’s 1.3 billion-strong biometric database.
Nilekani’s comments come at a time India’s federal government is planning to discourage trading in cryptocurrencies by imposing hefty capital gains and is also looking to classify crypto as an asset class, Reuters reported last month.
New Delhi has said that it will allow only certain cryptocurrencies to promote the underlying technology and its uses.
“If we have a very well regulated and legal, lawful crypto market, not as currency but as assets, and lot of young people build innovative applications around that then these young people could create a wave of global companies,” Nilekani said.
India has 15 million to 20 million crypto investors, according to industry estimates, with total crypto holdings of around Rs 40,000 crore ($5.35 billion).
In his first public comments on the subject, Prime Minister Narendra Modi in November said all democratic nations must work together to ensure cryptocurrency “does not end up in wrong hands, which can spoil our youth”.
India’s central bank’s digital currency may see its pilot launch in the first quarter of the next fiscal year.
