Facebook-Jio deal could pave way for cryptocurrencies in India

The mega Facebook-Jio deal could pave the way for the growth of cryptocurrencies in India driven by the former’s own digital currency Libra.

Last year, Facebook assembled a group of companies to create an open-source cryptocurrency Libra, which could potentially be used as a payment option in applications such as Messenger and WhatsApp.

Facebook, world’s largest social media company, recently invested $5.7 billion for a 9.99% stake in Reliance Jio Platforms. Experts see this as an opportunity for both companies to tap into the digital payments market while also promoting blockchain innovation in India.

Reliance Jio Infocomm Ltd (Jio) has already pledged to develop the biggest blockchain network in the world. The company made an official statement during the annual general meeting (AGM) on 12 August last year that it plans to install a pan-India blockchain network for industries.

So far, only startups are involved in blockchain and cryptocurrencies but experts believe Reliance and Facebook’s entry into the bandwagon could be a game changer.

“We are well aware of Jio’s involvement in blockchain technology as well as Facebook’s Libra project. When these two combine, it’s an obvious next step for them to explore blockchain crypto-related initiatives in India. Both are highly innovative companies and I don’t think that they would sit on the sidelines while the world moves ahead in crypto,” said Nischal Shetty, founder & CEO, WazirX, one of India’s leading crypto exchanges.

Moreover, as WhatsApp with its 400 million users, has been trying to enter payments in India, “there is a very good chance, we will see crypto initiatives emerging from this partnership,” Shetty said. “The partnership makes it easier for both of them to promote Libra for WhatsApp users for internal transactions. Libra for instance could be used as credits to buy items on Jio platform.”

Currently, Facebook-sponsored digital currency Libra is in the process of seeking regulatory approvals in different parts of the world including in the US and Europe. It’s too soon to say if it will be launched in India, even as the Supreme Court has lifted the Reserve bank of India (RBI)’s ban on virtual currencies.

“For Libra to eventually become a reality in India, further regulatory clarity is needed around cryptocurrencies within the country and may pose a challenge in the short term,” said Sumit Gupta, CEO and cofounder of CoinDCX, Mumbai-based cryptocurrency exchange.

“Though in its nascency, cryptocurrencies are bound to succeed in India because of their strong fundamentals and increasing growth and adoption globally. As stablecoins are a great way for beginners to get into cryptocurrencies, the success of Facebook’s Libra will be instrumental in ensuring that cryptocurrencies gain mainstream attention and adoption within Indian markets,” he said.

According to Garrick Hileman, head of research, Blockchain.com, “India is Facebook’s largest market in terms of users and so they must be keen to launch Libra in India. We continue to believe that Libra has the potential to be a game changer for cryptocurrency adoption by introducing billions of people to the benefits of digital currency. The now more centralized-Libra 2.0 network would also be more complimentary than competitive with decentralized cryptocurrencies like bitcoin.”

To be sure, regulatory hurdles remain. “While Libra 2.0 attempts to address regulatory concerns, it is still far from clear whether it can gain approval in markets like India. Launch approval will likely be needed on a market-by-market basis, and with governments focussed on covid-19 and the resultant economic crisis, we could continue to see Libra’s launch delayed,” Hileman said.

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