Indian Web3 experts and industry insiders believe that blockchain and cryptocurrencies are here because they were needed to finetune existing financial systems and benefit global fintech setup. Crypto experts echoed the sentiment on World Fintech Day, observed each year on August 1. The date marks the death anniversary of Cosimo de’ Medici, a 15th-century Italian politician and banker who established the Medici Bank and influenced the present-day banking system.
Experts maintain that the speed of adoption is a crucial metric for nations looking to lead the sector.
“The dynamic landscape of digital assets calls for adaptability. Digital assets have become immensely significant, bridging the gap between Web2 and Web3,” Dhruvil Shah, SVP – Technology, Liminal, told Gadgets 360. Shah further claimed that digital assets add transparency to financial ecosystems and promote financial inclusion. “As technology progresses, digital assets are poised to shape a decentralised and equitable global economy even further,” he added.
Limitations in Web3 and Possible Solutions
The global blockchain in banking and financial services market has reportedly grown from $1.89 billion (roughly Rs. 15,552 crore) in 2022 to $3.07 billion (roughly Rs. 25,262 crore) in 2023 at a compound annual growth rate (CAGR) of 62.1 percent.
Presently, due to the lack of concrete laws to oversee the new fintech branch of Web3 and cryptocurrencies, countries like India are taking a sceptical approach before integrating them closely with existing financial systems.
Industry insiders are, however, urging online payment players like Google Pay and Paytm to work on policies that could help them integrate Web3 services to their users as well.
“Traditional wallets deal with regulated fiat currencies, while digital assets lack comprehensive regulations. To address this, collaboration within the existing regulatory framework is crucial. One viable solution is the development of a hybrid platform, enabling seamless money transfers between traditional and digital wallets, thus expanding their services to a broader user base,” the Liminal official further noted.
Liminal is a digital wallet player based in India. The startup has hosted six rounds of fundings up until February 2023 and has managed to bag as much as $31 million (roughly Rs. 255 crore) in funding from over twelve investors. The company is among the around 450 Web3 startups that have cropped up in India in recent years.
Despite India’s stern approach towards taking gradual steps into the crypto and digital assets sector, the country’s tech talent has managed to garner the interest of venture capitalists as well as industry players seeking a blockchain workforce.
As of April 2022, Web3 funding in India had peaked to $1.3 billion (roughly Rs. 11,525 crore). At the time, a NASSCOM report had said that 11 percent of the world’s Web3 talent, resides in India, making the nation the third largest home for Web3 workforce. By 2024, the report projected, India’s group of 75,000 blockchain professionals to swell up by 120 percent.
Web3 Roadmap Predictions from Industry Insiders
Speaking to Gadgets 360, Purushottam Anand, Advocate and Founder of Crypto Legal noted that internationally, the fintech industry is already soaking in Web3 elements.
“Global consensus towards digital asset regulation seems overwhelmingly tilted in favour of regulation as against an outright ban. No major economy except China has banned digital assets while many international blocks or organisations like Europe, FATF and World Economic Forum (WEF), IMF and countries including India, Japan, Singapore, UAE and Hong Kong have either finalised or issued some draft framework of regulation. I believe, by 2025, majority of countries will have some form of digital asset regulation in place,” he said.
If not cryptocurrencies, nations around the world are now working on their respective Central Bank Digital Currencies (CBDCs). Created on blockchains, CBDCs are the digital representations of fiat currencies that eliminate the need for paper-based physical notes while also recording the details of all transactions in an unchangeable format on the blockchain.
Nischal Shetty, CEO of WazirX crypto exchange, told Gadgets 360 that CBDC trials are disrupting the fintech landscape, particularly for existing UPI players in India.
“With transactions settling in real-time directly through the central bank’s digital currency infrastructure, the need for intermediaries like payment gateways might diminish, leading to cost savings and more streamlined processes for UPI players. Scalable blockchains, with their high throughput capabilities, can facilitate instant transaction confirmations, making them well-suited for supporting the seamless and fast settlement of CBDC transactions,” Shetty said.
Currently, around $100 million (roughly Rs. 826 crore) in CBDCs are in circulation in different parts of the world where governments are carrying out trials. By 2030, this figure is expected to reach $213 billion (roughly Rs. 17,60,880 crore) with an estimated growth of 260,000 percent, a recent study by Juniper Research had said.
Meanwhile, banking giants like JP Morgan, Goldman Sachs, and Mastercard among others, are already testing Web3 waters with select crypto and digital assets-related offerings.