This article in The Ken newsletter isn’t very hopeful about crypto’s ability to make much of a difference to India. There are a couple of strong downsides to allowing unfettered access to crypto, but the article doesn’t make those. I think I’ll write about them on this site in a future post.
This article, unfortunately, makes claims like this regarding the “tens of billions of dollars coming to the country from remittances and remote work”
the contention that crypto will serve as a catalyst is moot. India already has a robust banking system to support inward foreign remittances and crypto can’t contribute anything further.
I wish the writer had chosen a different hill to make a stand on. I really do.
Cross border remittances are infamous for few options, very high processing fees and currency markups. Here’s the World Bank lamenting the state of remittances [PDF report].
Providers of remittance services in the formal sector typically charge a fee of 10–15 percent of the principal amount to handle the small remittances typically made by poor migrants.
For every INR 100 a migrant ends back, if their family receives just INR 85, that’s INR 15 worth of that migrant’s labour wasted. Lost. In moving electronic records from a computer system to another. In 20201.
This is unconscionable.
And as regard the robust banking system, look no further than this:
I am myself, as of Monday, waiting for an overseas payment that was made to me on Thursday. I have no idea where it is in my bank’s systems. When I wanted to remit money overseas late last year, my bank had me pull records from 2014 to prove that the money I was sending was in fact mine.
There exist many startups, both Indian and otherwise – Remitl.y, Remit2India, RemitGuru, Azimo, Xoom, Transferwise – that choose to tackle the problem of remittance in India.
Remittances is broken.
To say ‘crypto can’t contribute anything further’ is to accept the current state of finance: payments, investments, even inflationary money.
This is an example of failure of imagination –the worst sort of failure.