Infosys’ Nandan Nilekani says Indians should embrace cryptocurrency as an asset class

“Just like you have some of your assets in gold or real estate, you can have some of your assets in crypto…I think there’s a role for crypto as a stored value but certainly not in a transactional sense,” Nilekani told the Financial Times in an interview.

In the interview, he further added, “I think there’s a role for crypto as a stored value but certainly not in a transactional sense.”

Nilekani’s comments come amid cryptocurrency facing regulatory uncertainty in the country.

The IT veteran, who spearheaded the Aadhaar identity system in India, told FT that permitting individuals and businesses to tap the $1.5tn market would allow “the crypto guys to put their wealth into India’s economy”.

Earlier too, Nilekani has endorsed cryptocurrencies as a store of value.

At a Clubhouse engagement in March with angel investor Balaji Srinivasan and Karthik Reddy of Blume Ventures, Nilekani had said, “We should think of crypto as an asset class and allow people to have some crypto. Crypto as a transaction medium will not work as fast as UPI, which is targeting a billion transactions a day. But crypto has enormous capital,” according to several reports.

Nilekani has long worked with Indian authorities to help craft digital policies. He also chaired a central bank committee on digital payments in 2019.

India is a potentially big market for crypto but the country’s official stance is unclear, with the spectre of an outright ban looming despite surging volumes among local traders.

Last year, the Supreme Court ended a 2018 ban on banks from dealing in virtual currencies such as cryptocurrencies including bitcoins. A three-judge bench led by Justice Rohinton Nariman quashed the Reserve Bank of India notification issued in April 2018 that had introduced the restriction.

The development came as a major relief for the sector, as the RBI ban restricted lenders from facilitating banking transactions for cryptocurrency exchanges and traders. The top court’s order followed a plea by the Internet and Mobile Association of India (IMAI) objecting to the RBI ban. The industry body – whose members carried out cryptocurrency transactions among each other – had claimed the move effectively banned legitimate business activity via virtual currencies.

However, recently, the RBI said that it has been brought to its notice via several media reports that banks have cautioned their customers from dealing in cryptocurrencies by making a reference to a circular issued by the banking regulator on April 6, 2018.

“Such references to the above circular by banks/regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020,” the RBI said.

Speaking to FT further, Nilekani argued that Infosys’s experience and scale — the company has about 250,000 employees — meant it was well placed to thrive as companies revamp their internal systems to adjust to a post-pandemic routine of remote or flexible working.

“I think, frankly, the opportunities today are better than ever before,” Nilekani said. “In the 40 years I’ve been in this industry, I’ve never seen so much change and acceleration happening,” he told FT.