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Day: December 21, 2024

Should India embrace Cryptocurrencies?

India’s dynamic digital landscape and youthful demographic are driving a powerful wave of cryptocurrency adoption, positioning the country as a key player in this financial revolution. Despite regulatory hurdles, Indian consumers’ demand for financial autonomy through cryptocurrencies is in line with the country’s democratic values. By embracing cryptocurrencies, India isn’t just innovating its financial sector; it’s empowering millions, especially those underserved by traditional banks, with new opportunities and expanding consumer choice in transformative ways.

Globally, decentralized finance (DeFi) is gaining momentum as nations seek alternatives to traditional banking. Nations like El Salvador have adopted Bitcoin as legal tender marking a strong stride towards financial sovereignty. For India with its aspirations to become a global leader embracing crypto currencies offers an opportunity to lead this movement, fostering innovation and economic inclusion. 

India ranks among the top countries globally in crypto adoption. According to latest reports, India was fourth in global cryptocurrency adoption, with uptake notably high among young Indians. This trend makes sense: India has the world’s largest population under 25, who are inclined to favor decentralized finance (DeFi) over traditional banking.  For Indian consumers, crypto currency has become a smart and effective way to safeguard against inflation and currency devaluation. During global inflation of 2022, many Indians opted for bitcoin and stablecoins to preserve their savings, mirroring trends in other countries like Argentina and Turkey, where local currencies were severely depreciated. 

While concerns about money laundering and fraud persist, a well-regulated crypto ecosystem can mitigate risks. Countries like Singapore and the UAE have implemented robust frameworks that encourage innovation while maintaining financial integrity. India could adopt similar models, ensuring consumer protection without stifling growth.

Domestic transactions

India also has approximately 190 million unbanked adults, a group often barred from traditional financial services. Here, cryptocurrency and blockchain technology offer an inclusive alternative. For example, Polygon—a blockchain platform co-founded by an Indian startup—seeks to support decentralized applications for finance, supply chains, and even identity verification. Through such projects, individuals in remote areas can access essential financial services, directly enhancing consumer choice.

Digital solutions have already proven their worth in India, as seen with the significant impact of Unified Payments Interface (UPI) on transactions across the nation. In the same vein, cryptocurrencies provide an effective tool for safe, near-instance transactions with nominal fees, especially for cross border transactions. For a country receiving over $87 billion in annual remittances, crypto offers a chance to significantly cut the fees that families abroad often lose to service charges. Using Bitcoin or stablecoins for remittances could reduce transaction costs and put more money directly in the hands of recipients.

International transactions

India’s reliance on remittances, with over $87 billion flowing in annually, highlights the need for cost-effective solutions. Traditional services often charge up to 7% in fees, significantly reducing the money families receive. In contrast, cryptocurrencies like Bitcoin or stablecoins offer near-instant transfers at minimal cost, putting more money into recipients’ hands. Countries like the Philippines have already embraced crypto remittances, reducing costs for overseas workers and boosting local economies.

Blockchain technology’s potential extends beyond just finance. Initiatives like Binance’s blockchain-based microloans in Africa or Stellar’s remittance solutions in the Philippines demonstrate how decentralized finance can uplift underserved communities. In India, similar innovations could empower rural populations, offering them access to credit, savings, and investment opportunities.

The stability and resilience of cryptocurrencies during crises further showcase their potential. For instance, during the Russia-Ukraine war, Ukrainians used crypto currencies to protect and transfer assets amid banking restrictions. For Indians—especially those working or studying abroad—cryptocurrencies could act as a reliable store of value during economic disruptions, providing a secure financial option.

Despite its potential, cryptocurrency’s volatility and susceptibility to scams remain concerns. Educating consumers about secure trading practices and promoting the use of trusted platforms are crucial. Initiatives like Coinbase’s learning rewards or Binance Academy are already helping users understand crypto’s intricacies. India could adopt similar educational efforts, ensuring that consumers are empowered to make informed decisions.

India’s current tax structure, including the 1% TDS and 30% tax on gains, has pushed millions of users to foreign exchanges, reducing the competitiveness of domestic platforms. Following the TDS introduction in 2022, reports indicated a surge in offshore accounts, with over 450,000 sign-ups on one foreign platform in just one month. This shift not only hampers local companies but also limits consumer choices within the country, pushing policymakers to consider more balanced regulations.

Potential

India’s crypto demographics underscore the demand for modern financial options: 45% of crypto users are from Gen Z, 35% from ages 26-35, and even 8% from the baby boomer generation. This youthful demographic points to an enduring demand for financial solutions suited to the digital age. A balanced regulatory approach would allow India to leverage this demographic advantage and strengthen its position in the future of finance.

Adopting cryptocurrencies could open new avenues for jobs across fields like blockchain development, cybersecurity and fintech. As a global IT juggernaut, India’s tech sector is in an ideal position to capitalize on this growth. By becoming a crypto-hub, India can attract investment, foster innovation and boost the digital economy. 

India’s young population, coupled with rising push for financial inclusion and diverse investment options, presents Indian consumers with every reason to embrace cryptocurrency. This isn’t simply about new investment avenues, it’s about championing consumer choice, forging financial resilience and taking bold steps towards innovation driven future. By adopting a balanced approach to regulation, Indians can empower themselves to engage with the global economy and position themselves as front runners in the digital financial sphere.

By adopting cryptocurrencies with smart and balanced regulation, India can forge a course towards financial innovation and inclusion. Policymakers must embrace the transformative potential of digital assets and create an environment where consumers can thrive. The moment is now for India to lead the global shift toward decentralized finance, unlocking new opportunities for its citizens and the broader economy.

Originally published here

Privatize Canada Post so it can’t keep stealing Christmas

A month after postal workers walked off the job, the Government of Canada asked the Canada Industrial Relations Board to order an end to the strike. This may seem like a relief to Canadians, but it is also time to reflect on why the country is forced to suffer such disruptions every few years. How much longer do Canadians have to be held hostage to the whims of a Crown corporation with a monopoly on letter mail?

The strike has caused charities to lose significant sums of money at a time when Canadians are usually feeling particularly generous. For example, the Ottawa Citizen recently reported that the Ottawa Mission, a local homeless shelter, relies on holiday charity mail-outs for donations from a broad base of donors, especially at this time of year. The Salvation Army has also stated that donations are down 50 per cent since the beginning of the strike.

The Canada Post strike could also not have come at a worse time for Canadian small businesses, as this is the season in which their sales are usually highest. Back in November, the Globe and Mail reported that “​​small businesses, which tend to be dependent on Canada Post because it is a cheaper option for parcel delivery, have warned that a prolonged strike could devastate them financially and could lead to higher costs for consumers.”

This has proven to be correct. I spoke with Canadian small business owner Brynn Deamer, who said that, “Canada Post is the only option for Canadians to send letter mail, all of my Canadian customers must use other parcel carriers like UPS, Purolator, FedEx. So when my customer orders, they must now pay at least $15 for shipping to get their orders on time, which, with my items being an average $10-$40, that type of shipping cost is far too high.”

What happens if a customer doesn’t want to pay $15-$20 for shipping from a small business? “I’m still offering the free Canada Post shipping option, but they have to wait to get their package shipped out until the strike is over,” Deamer said. Even though the strike has now ended, her customers will likely be waiting a long time, as experts are saying that most packages will not arrive before Christmas.

Deamer went on to recount what she has seen happening to other small businesses: “Some are taking the route that I did and are offering other shipping options, and some are all together shutting down their shops temporarily and hoping the strike ends soon.”

Vincent Geloso, a Canadian economist who teaches at George Mason University, recently argued that it might be time to break up the Canada Post monopoly. There is a precedent for this. He gives examples found in Europe, where, as a result of a European Commission directive, “all letters regardless of weight have been open to competition since 2013. The directive does not mandate the privatization of state-owned postal companies; it simply ends postal monopolies.”

Without a monopoly over letter mail, Canada Post would have to compete with other providers like any other company would. Workers could still strike when they felt they needed to, but such strikes would no longer hold Canadians hostage due to the Crown corporation’s monopoly.

Some European countries went even further and privatized their postal systems. As a result, Geloso points out that prices for stamps and other postal services fell by 11 per cent in Austria, 15 per cent in the Netherlands and 17 per cent in Germany over 10 year when adjusted for inflation, with all those countries now having lower prices than the European average.

Before the strike happened, Canada Post was planning on increasing stamp prices in January to try and generate about $80 million in revenue. Now that the strike has added to its financial burden, Canadians shouldn’t be surprised if harsher actions are taken to recoup the Crown corporation’s losses.

The last time Canada Post workers went on strike was in 2018, and it was also timed to coincide with the start of the holiday season. Canada Post’s monopoly allows its union to hold the entire country hostage, especially during the holidays. Without that monopoly, workers could still strike, but it would no longer bring charities and small businesses to their knees. It is time for Canadians to seriously rethink this government-granted monopoly before the next strike hits and ruins another holiday season.

Originally published here

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