According to a new report by Economic Times, some of the leading businesses in India are experimenting with the idea of using internal cryptocurrencies for treasury management, settlement and paying vendors and suppliers. Notable names include Reliance Industries Ltd (RIL), Hindustan Unilever Ltd (HUL) and HDFC Bank, among others.
The report says that the companies want to use cryptocurrencies strictly for internal processes. Digital currencies can be used an efficient capital management tool which can be transferred immediately and reconciled later, instead of transferring money directly. However, the companies have not defined a specific timeline for such implementation.
This is the first time Indian companies have specifically spoken about cryptocurrencies. While many businesses have talked about blockchain technology before, the use of a cryptocurrency has been highlighted for the very first time. Virtual currencies can be a great mechanism for high-frequency transactions which eliminates the need for book entries or actual transfer of money. The cryptocurrencies will be used to reconcile accounts, and actual money transfer will take place only at the end of the quarter.
What about cryptocurrency regulations in India?
Cryptocurrency regulations remain a grey area in India. While new reports have suggested that the Indian government may eventually regulate crypto assets, the lack of a regulatory framework have stopped businesses from fully embracing this financial innovation.
The report says that RBI’s concerns with cryptocurrencies are only around the speculative risks involved. Since these companies are only planning to use cryptos for internal usage, it should not be a concern for the regulators. Despite this, there will be legal, regulatory and financial requirements for such an arrangement and companies will have to figure it out.
Nevertheless, it is a good sign for the cryptocurrency market in India that companies want to build internal blockchain-based tokens. Even if one cannot trade these tokens in the open market, this will pave the way for more acceptance of cryptocurrencies among regulators. Ironically, it is these private blockchains which may just save public blockchain-based cryptos like Bitcoin in India.