"India Could Lose Out on One of the Most Important Global Financial Rallies"

The government is all set to bring a Bill, which is likely to ban cryptocurrency trading, mining and investments in the country. Rallying over 300 per cent in the last year, the world's largest cryptocurrency, Bitcoin, has gained popularity in the country among other crypto assets, with top exchanges witnessing a multifold jump in trading volumes. Changpeng Zhao, also known as CZ, Founder and CEO of Binance, the world's largest crypto exchange in terms of volume, talks to Avneet Kaur about the government's potential move. Edited excerpts:

News of the government's proposed ban on cryptocurrencies, in favour of a digital rupee, is doing the rounds. Your thoughts.

I cannot comment directly on government policy, but based on our experience globally, a better way to address the issue would be to start a constructive dialogue with all the players, with an aim to create sustainable regulations. It would promote the growth of the sector, while addressing the government's concerns.

What if the proposed ban comes through?

The current market conditions in the digital asset space have brought renewed interest in the sector in India, both from a retail and institutional perspective. Universities, including IITs, have embraced the sector's underlying technology, blockchain, which is set to lead the way globally. Indian exchanges have recorded all-time high trading volumes and user registrations in the past six months.

The digital asset industry is expected to have a very positive impact on employment in India based on the expected number of jobs it will create in IT, customer support, marketing and design spaces. Any regulatory change that would dampen the rapid growth of this sector, which is globally leading the way in the fintech space, would slow down this growth. If decentralised currencies are eliminated from the financial infrastructure, India as an emerging market hub may lose the opportunity to participate meaningfully in one of the most important evolutions in the financial sector.

Bitcoin has emerged as the best asset class of 2020 with over 300 per cent return. Ether is also touching new highs. What is the future of these currencies?

Bitcoin and other cryptocurrencies are the future of finance. We are currently in the pre-adoption phase. Institutional and retail investors are entering the market in large numbers. Bitcoin has jumped from $30,000 to $46,000, hitting multiple all-time highs in the past 30 days. On a long-term basis, Bitcoin and other cryptocurrencies have been on an upward price trend since their creation. While there are short-term fluctuations, I am bullish on the future of cryptocurrencies as a store of value and a medium of exchange in the long-term.

What is your advice for investors?

Just one, DYOR (Do your own research). Don't fall prey to scams, always look out for security updates and never share your keys. As with all asset classes, never invest what you can't afford to lose.

Some experts believe Bitcoin can replace gold as a hedge against inflation? Your take.

The on-going economic, political and social events, combined with the effects of the pandemic, have set the scene for a financial storm, which will need a next-gen support system. Bitcoin is a better store of value than gold and is a valid hedge against inflation and potential economic crises. Both gold and Bitcoin are scarce, but we can't precisely quantify the amount of gold left to be mined. But we know that there are only 21 million Bitcoins, and this guarantees its scarcity. Blockchain being an immutable ledger gives Bitcoin the security of immutability. The distributed network of nodes ensures the reliability and efficiency of the network as they validate transactions and maintain a transparent public ledger. Gold lacks reliability in terms of originality and true value.

Binance recently became the world's largest cryptocurrency exchange in terms of trading volumes within a year of its launch. What led to that?

When we launched Binance, our aim was to provide a platform for crypto traders to buy and sell digital assets at a low cost. Upgrading our security, rolling out market-fit products and constantly listening to our customers got us where we are today.

So, where is Binance based actually?

Our team is dispersed throughout the globe. Binancians are everywhere; we are a decentralised organisation.

@avn_kaur