India recently introduced taxation on cryptocurrencies. Will this impact India’s reputation as a technology leader and exporter?
Among all countries, India is the first to issue a cryptocurrency regulation. Actually, we see it as good news because, as long as the government is willing to regulate the industry, it means it is accepting the change in technology. We also believe that it will help protect crypto investors.
Also, we noticed that crypto assets, including the NFT, are booming in India, and the country is also planning its own CBDC (central bank digital currency). All these positive signs will contribute to the long-term growth of the industry in the region. We believe crypto and blockchain technology will be the future, and this will help India consolidate its role as a leader among the IT export nations.
Many analysts and bureaucrats have raised concerns that cryptocurrency doesn’t have an underlying asset and it is a risk to the financial stability of the country. What do you think of these concerns?
When I first entered the sector, I wondered about the underlying value of crypto and bitcoin? But since then, I have been working in this industry for more than four years, and through my interactions with several experts, I realised that there are actually two types of values.
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The first type of value is similar to stocks. Why do stocks have value? This is mainly because there is a real company behind it, and the performance of the company impacts the value of the stock.
Then there is another kind of value that comes from consensus. If everyone believed in it, that too has a value. Why do we think fiat (currency) has value? It’s because everyone believes it has value. And that’s the case for bitcoin as well. It was first created by a small group of geeks, but as time went by, more and more people started to believe in the future of this technology. This has led to the growing value of bitcoin, and it also applies to other cryptocurrencies.
How will the Russian-Ukraine crisis impact the volatility in cryptocurrencies?
Compared to other assets, crypto is relatively new. This might be the first time crypto has been involved in a war. To be honest, we misjudged the current condition because we thought bitcoin and other cryptocurrencies would be a good hedge against the performance of other assets. We noticed that as bitcoin continues to go mainstream, it will also be impacted by the performance of other assets.
When people panic, they sell every asset they hold to get cash to survive the difficult times. For bitcoin and other cryptocurrencies, this is a good time to showcase to the world how it’s better than other assets. For instance, we noticed that crypto donations are picking up in this situation. This is mainly because it’s easier to transfer cryptocurrency compared to other assets. It also proves that crypto has value even in this difficult time.
Previously, people found it difficult to transfer their assets from one country to another. In the case of bitcoin and other cryptocurrencies, this can be easier in the worst-case scenario. This could be an opportunity for crypto to go mainstream and achieve mass adoption.
Will CBDCs have any impact on existing cryptocurrencies?
We ponder the question every year. Last year, we saw that many institutions started investing and a growing number of countries started accepting cryptocurrencies. Some countries have even accepted it as a legal tender. In the long run, good regulation is always a good thing; whether it’s about regulating the exchanges or issuing CBDC in the country.
Technology is always neutral. But at the beginning of every technology, the government needs some time to get used to it and understand how it works. At KuCoin, we have worked with several regulators to find the best way for the industry. As more countries start to regulate and launch CBDCs, all other cryptocurrencies will benefit in the long run.
What are your India plans?
Although KuCoin operates in over 200 countries and regions, India is one of the most important markets for us. But when we think of India, we are not just thinking about selling our services; we are thinking about how we can leverage KuCoin’s service and product offerings to help the people of the country in the crypto industry.
For example, two years ago, we launched a fund in India to support early-stage crypto startups. We are also working with the local crypto companies. For instance, we are working with Bitbns, which is one of the biggest crypto players in the market. Currently, we are also launching a contest with Chingari, which is one of the most popular short-video-sharing apps. In April last year, in India, we noticed that the Covid situation was very serious, so we launched a charity fund and we worked with a lot of charities and local partners to distribute food and groceries.
We are also looking for domestic talent, and in the near future, we will have a plan to set up operations in India.
Do you think bitcoin still offers the diversification advantage for individual investors?
In the last few months, we have noticed that there is a strong correlation between the price of bitcoin and the performance of US stocks. We can hardly say it’s a bad thing because, in a way, this is a result of globalisation and proof that bitcoin has become mainstream.
It is inevitable that bitcoin will be impacted by the performance of other assets. In the long run, the correlation will become weaker and weaker as more countries start to accept bitcoin. In the long run, the prices will be less impacted by US investors.
In crypto, we have a concept called decentralisation. Currently, bitcoin prices are heavily impacted by US stocks, primarily because they have the same group of investors. As more people buy bitcoin, the prices will be less impacted by the movements in the US stock market.
