India backs blockchain but adoption will be cautious

Subject

Blockchain adoption in India.

Significance

On April 22 the Reserve Bank of India (RBI) issued a directive ordering all cryptocurrency accounts on Indian exchanges to close by July. Despite this, on May 16 Indian information technology giant Infosys, in collaboration with seven major banks, launched a blockchain-driven trade finance initiative. In his budget speech, Finance Minister Arun Jaitley said that the government will “explore …blockchain technology …for ushering in digital economy”.

Impacts

• The ban on trading cryptocurrencies on Indian exchanges will drive investors to foreign exchanges rather than away from the asset class.
• The RBI ban on entities under its influence engaging in services relating to cryptocurrencies will slow blockchain adoption.
• Tests of blockchain in trade finance, 'know your customer' data and non-performing asset management will extend to other applications.
• Indian cities including Vizag in Andhra Pradesh are leading in adopting blockchain, supporting regional development.