In June this year at the London Business School, the Chairman and Managing Director of Egypt’s Commercial International Bank anticipated his Regulator’s response to any attempt to pursue the Blockchain strategies he and others (rightly) believe to be key to the future of international banking: the Regulator, he smiled, would shoot him. Hisham Al Arab is no stranger to firearms, having fronted down an armed contingent of workers in his banking hall in the aftermath of the Arab Spring, but it’s unlikely he would take any such threat from the Regulator seriously. But he was right to highlight the significance of regulatory drag as a key feature of emergent Blockchain technologies, and also right to look across admiringly at burgeoning technology markets in India, which are rapidly making the subcontinent the Blockchain capital of the world.
All of which might seem a little odd given the Reserve Bank of India announced on 6th April this year that the subcontinent’s Banks should stop offering services to crypto exchanges and crypto related businesses. That, however, was merely a strident coda to last year’s demonetization policy and on closer analysis the directive was always going to be more of a pause than a full stop. Since the Union Budget was delivered in April, India has made huge strides to becoming a world leader in Blockchain technologies and no Government (or Central Bank for that matter) can afford to ignore this practical reality. Mr Al Arab was right to be envious.
And of course Blockchain technologies have profound implications for Central Banks too as they strive to remain relevant in a digital world. The Reserve Bank has since adopted a much more nuanced and structured acceptance of digital business platforms and, crucially, their regulation all of which is helping bring to fruition Prime Minister Modi’s vision of a digital subcontinent: what is now being characterised as the Internet of Value.
For example, the Modi Government is currently backing an initiative using Blockchain technology to manage its own agricultural subsidy programme. The National Institute for Transforming India, an influential Policy Think Tank on the subcontinent, has now signed an MOU with Narmada Valley Fertilizers that will both improve the efficiency of distribution of resources in this hugely important sector and also improve transparency of the overall subsidy process. That has been made possible through Blockchain technology.
And hard on the heels of this announcement Telangana’s Technology and Electronics Department also last week signed an agreement to launch India’s first Blockchain District: structured specially to incubate start ups in the sector as well as developing a variety of strategies designed to resolve market issues including future regulation. Telangana’s IT Minister wasn’t coy in expressing the scale of his ambition: “It is a huge step in reskilling the future. Blockchain experts will be our crown jewels, working together to make India the Blockchain Capital of the World”.
And as a still further example, more than 24,000 farmers in Guntur have bartered their land as part of an initiative by the newly formed state of Andhra Pradesh to pool 53,000 acres for construction of a new capital city at Amaravati: the whole complicated process is based on Blockchain technologies which are streamlining every stage of the transfer process, circumventing the existing creaking system of paper based land registration. The new digitised registry also reduces the risk or malevolent intervention and increases transparency. It would not be possible without Blockchain.
So a lot has changed since April. The Government, far from distancing itself from the technological economy, is now fully embracing the required changes and putting its full weight behind India’s Blockchain revolution…and it won’t need a gun to get its way.
I think we were all a little surprised at the Central Bank’s announcement in April this year, delivered shortly after similar comments were made by the Minister of Finance as part of the Union Budget debate (no surprise there), but as the article rightly points out this was not so much a policy imperative as a straw in the wind. The Minister and the Bank were in truth putting down a tough marker on their resistance to crypto markets becoming an outlet for money laundering after demonetization, and quite rightly so. But neither Government nor Bank can afford to ignore the importance of the Blockchain sector.
Events since April have proved that they haven’t in the slightest ignored its importance.
With initiative after initiative now being actively supported and indeed promoted by the Modi Government, there is every reason to believe India will indeed become the Blockchain capital of the world. Blockchain technologies are steadily and irreversibly being placed at the heart of the subcontinent’s powerhouse economy.
As I have said before, there is no doubt that the key innovations Blockchain has to offer will fundamentally change the way that we all do business in the future and I’m very proud that Red Ribbon will now play a part in that process. As the article rightly says, India is now at the forefront of key developments in the Blockchain and Crypto Currency sectors and I want our investors to be able to share in the exciting opportunity that offers.