Blockchain Technology Gaining Ground in India
While on the one hand regulatory pressure from the regulator and banks, as well as market uncertainty is affecting cryptocurrency trading in India; blockchain technology is certainly gaining ground in Asia’s third-largest economy. India’s central bank, the Reserve Bank of India (RBI) may not have approved cryptocurrencies; however, it has approved the implementation of blockchain technology for the financial sector.
First Blockchain-Based Trade Finance Solution
Three platforms offering Trade Receivables Discounting System (TReDS) — Receivables Exchange of India, A.TReDS, and M1xchange — have now implemented blockchain technology in their systems with the help of US-based blockchain firm MonetaGo. Accordingly, the three platforms will work independently, but will be interlinked with blockchain and shared data. The move sets a precedent as being India’s first blockchain-based network offering a trade financing solution.
The TReDS was introduced by the RBI to facilitate financing trade receivables of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers. “The project has been implemented without any cryptocurrency being used for settlement,” said Jesse Chenard, founder & CEO, MonetaGo, quashing any speculation around cryptocurrencies.
The blockchain-based network went live last week. The move should help MSMEs get better rates and discounts. From the exchange’s perspective, blockchain implementation should help reduce double-invoicing problems and financial fraud.
Earlier Blockchain Initiatives in the South Asian Nation
The country’s finance minister, Arun Jaitley, has already announced plans to adopt blockchain technology in his budget speech on February 1st. In January, a southern state in the country, Andhra Pradesh has signed a MoU with Covalent Fund to start a Blockchain ecosystem in India. A blockchain university will soon be set up and an investment of up to $10 million will be made as an initial pilot program. The state is already testing blockchain technology for land deals with blockchain startup ChromaWay.
Another state to express belief in the technology is Maharashtra. Devendra Fadnavis, the chief minister of the state believes it has the potential to reduce trust deficit. “Public delivery of goods and services will become more transparent through Blockchain and will reduce trust deficit among service providers and receivers. Blockchain will also create an internet of trust, internet of value and not just internet of things (IoT),” he said at a public event.
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