India is poised to emerge as a leader for decentralized finance (DeFi) in Asia, experts say—but reports that the government could introduce a new ban on cryptocurrency threaten to stifle the industry in its crib.
DeFi provides financial services through a decentralized network that interacts with smart contracts and dApps, and is predominantly built on the Ethereum blockchain. Although it’s early days for DeFi in the world’s fifth-biggest economy, industry leaders in India believe that it’s vital to the country’s future prosperity.
Banking India’s unbanked with DeFi
For the hundreds of millions of Indians who are unbanked or underserved by traditional financial services, DeFi can provide low-cost alternatives for lending, obtaining credit and borrowing money.
“[DeFi] does not discriminate between the haves and the have-nots, the rich and the poor as much as the traditional financial ecosystem does,” said Siddharth Verma, co-founder of Nuo Network, a Mumbai-based company that allows users to lend, borrow, or margin-trade crypto assets.
As India’s economy reels under the impact of the coronavirus pandemic and subsequent lockdown, those in the industry say that DeFi may be more important than ever, with the clock ticking on businesses that are in dire need of credit or loans just to survive. A recent survey conducted by non-governmental trade organization Nasscom showed that 70% of Indian startups have less than three months of funds to keep going before they run out of money.
“SMEs are the heart of India,