There is a paradigm shift happening between private and public equities fuelled by blockchain technology and evolving regulatory environment.
India now needs to democratise private investing and work on providing value propositions of crowd financing to SMEs, while simultaneously growing a robust community of retail investors passionate to support the companies of tomorrow. Basically, the government needs to create a framework for SMEs to apply for crowd financing through initial tokenised equities offering to the public on a crowd financing investment platform. Needless to say the platform would be on the blockchain.
On the investor side, the Centre should enable retail investors to participate in every financial offering launched on a crypto platform. A set criterion may be applied to filter out participants from masses, one of them is creating a lottery-based auction. For example, if a company is raising Rs 10 lakh through crowd financing, then a fixed limit on both investment per person, and a number of participants can be applied using a lottery-based auction.
The ever-growing chasm in financial inclusion is holding the overall economy as well and not just MSMEs. Crypto investment could ease the challenge. Let's take a look at China that doesn't look at cryptocurrency as a legal tender neither its banks acknowledge them, yet all the top crypto gaints on NASDAQ get their investments from Chinese investors. The reason for that is businesses and investors wish to cut a slice in the crypto industry which has grown into a billion-dollar economy within a short span of time. Crypto giants have grown bigger than almost all tech giants that we have in India today. If India green lights this, all this investment can easily be welcomed into our economy. And a strong infusion of foreign investment can be used to satiate the financial needs of MSMEs. Sounds like a plan?
The decade-old crypto economy is now worth trillions of dollars. There are over a hundred million crypto holders globally, and there are fifty plus crypto protocols valued at over $1 billion. India h as a great opportunity to offer a viable path to deploy this new crypto wealth in a calibrated manner while solving for SME financial inclusion. For this to happen, inflows of cryptocurrencies from KYC enabled investors through approved Indian and global exchanges can potentially be allowed into India for the purposes of enhancing SME access to low-cost global capital giving them a massive shot in the arm.
GST-registered companies could for instance, receive capital against their issued e-invoices and other information collateral in special accounts opened via a controlled conduit such as GIFT city, which is one of India's favoured bridges to international markets. Open Credit Enablement Network (OCEN) could be a great mechanism based on which crypto investment can flow into MSMEs. OCEN, for those of us who are not aware was announced by Nandan Nilekani in July last year, works as an open API for loans to allow loan service providers to connect with banks and non-banking lenders to digitise origination, underwriting, and servicing of a loan.
(The writer is Founder, India Blockchain Alliance and Chief Growth Officer, Chain Sense)
Bitcoin gains to fund veterinary hospital at El Salvador
Bitcoin lost almost 10 pc of its value on September 9, after the Central American nation became the first worldwide to authorise the cryptocurrency as legal tender. El Salvador will invest some of the $4 mn gains it got from its Bitcoin operations to build a veterinary hospital, President Nayib Bukele has said. After reaching a 10 pc low, it has surged over 30% in the past week to its highest levels since May. The Bitcoin Trust, which congress authorised in August, with a balance of $150 mn, now has a "surplus" of $4 mn, Bukele said. "So we decided to invest a part of the money in this: a veterinary hospital for our furry friends." Bukele wrote on Twitter. The hospital would offer basic services and emergency care besides rehabilitation.
Disclaimer: Cryptocurrency is an unregulated digital asset and is subject to market risks.