cryptocurrency: Cryptocurrency gains ground as a payment method in India
ET spoke to various businesses – from a fitness trainer in Chandigarh to a tattoo parlour owner in Delhi NCR – to understand the allure of using crypto for payments.
In some instances, the use is being dictated by businesses trying to ride on the crypto frenzy that had built up over the Covid-19 pandemic, while for some businesses the acceptance is an attempt to get ahead of the curve.
In the absence of any law specifying treatment of cryptocurrency, legal experts said the use of cryptocurrency for payments in India is neither legal, nor illegal. This has not deterred businesses or customers from opting for such transactions.
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India’s oldest crypto exchange, Unocoin, for instance, has allowed its users to recharge their Fastag accounts using Bitcoin. It is also allowing Bitcoin transactions for bill payments, and e-commerce.
Since going live with Bitcoin top-ups for Fastag, it has seen transactions to the tune of Rs 8-Rs 10 lakh in the last 2-3 weeks, 50% of which were made by those aged over 35, Sathvik Vishwanath, cofounder of Unocoin, told ET.
The exchange wants to revive the original intent behind creation of Bitcoin, which was “fast and free payment” from anywhere in the world without a middleman, and to expand its use cases for retail traders, which currently stand over 15 million in India according to industry estimates.
The company purchases Bitcoin from users opting for payments and settles with partner vendors twice or thrice a week.
“Nowadays, it is going way too much toward an asset class, and the utility part is getting side-lined,” Vishwanath said.
The exchange intends to tap into a massive customer base with Fastag, he added.
Raghav Gupta, director of The Rug Republic, an Indian decor brand that sells home decor items, said the company wants to show the regulators that there is support for crypto from the Indian business community.
“Only when the government sees that there are reliable businesses willing to do this is when you can expect favourable laws,” Gupta, who invests in crypto in his personal capacity and who recently joined his family’s export business, said. In fact, he recently convinced his father to add crypto as a payment option for the eight-year-old business.
“The government has recently assembled a body to take charge of crypto regulations and I am confident that if brands like us and many more adopt it, then rule makers will also be able to see that the blockchain is indeed the future,” he said.
These developments come at a time when jurisdictions across the world such as the US city of Miami, and El Salvador have
allowed citizens to use Bitcoin as legal tender for payments.
However, the Reserve Bank of India (RBI) has been vocal about its concerns regarding cryptocurrency and is keen on banning the use of private crypto. The government, on the other hand, has indicated its preference toward classifying crypto as an asset class, similar to gold.
Legal experts said that a lack of relevant statutes makes such transactions akin to barter deals where the acceptance is purely at the discretion of the recipients.
“Currently, cryptocurrency is only being accepted as payment by certain platforms in India such as specific restaurants, online e-commerce platforms, etc. In the absence of dedicated cryptocurrency laws or any specific ban on the same, cryptocurrencies in India fall in a grey area, and the acceptance of the same as a mode of payment is at the discretion of the recipient,” said Anu Monga, partner, Anant Law.
Mathew Chacko, partner, Spice Route Legal, agreed.
“At this point, there is very little that stops barter of this sort. There is an interesting policy question – should we as a country stop this? And an allied question – can we? We await guidance from the RBI on all of these,” Chacko said.
Fitness trainer Yash Vardhan Swami said crypto has become too big to ignore this year.
“I’m looking at it as an automatic investment. It is something that interests me, but you know I haven’t done deep research on that. I have seen a lot of smart people talk about it. It does seem a little risky, but I would like to have some money into it, so it is an automatic investment for now,” the 26-year-old, who has clients in Chandigarh and Ludhiana paying in crypto for his services, said. Apart from Bitcoin and Ethereum, he also accepts payments in Dogecoin, Polygon’s token and Cardano.
Lokesh Verma, founder of Devilz Tattooz, who owns and operates three studios in New Delhi and the wider National Capital Region, was a long-term believer and investor in crypto before he started accepting Bitcoin, Ethereum, Ethereum Classic and Cardano from clients in March, after such requests piled up from younger clients.
“It is like another mode of payment. It was cash first, then debit and credit card, UPI (Unified Payments Interface) and now crypto is another way,” Verma said. “I know cryptocurrencies are highly volatile, but if I am not a risk taker, I would just be doing a job after my MBA. Without risk, there are no rewards.”
Cryptocurrencies are pieces of digital code and use encryption to control the creation of these units and to validate the transfer of funds.
Vaibhav Gupta, who operates a viral marketing agency Desi Crypto, started accepting USDT, Bitcoin and Ethereum last year to build his company reserves, among other reasons.
Gupta said the company accepts tokens based on their future potential. “We have always built cash reserves and now I started doing the same in crypto,” he said. “Some of our employees and vendors too prefer to be paid in crypto.”