The Indian government doesn’t recognise cryptocurrencies as legal tender. For years, they’ve been suspicious about the use of the technology for nefarious purposes such as financing terror operations. However, many from the government wouldn’t have imagined that global crypto evangelists would find a way to contribute their crypto assets towards Covid relief efforts.
Amid the second wave of the Covid-19 pandemic in India, 3 lakh daily new cases and over 2,700 daily deaths have exposed the extreme frailty of the country’s healthcare infrastructure. Besides a lack of hospital beds, there is also a shortage of medical-grade oxygen needed for critical Covid patients and medicines such as Fabiflu and Remdesivir. Taking notice of these deplorable circumstances, crypto startup Polygon’s cofounder and COO Sandeep Nailwal tweeted Saturday (April 24): “Can’t take this sitting down anymore, I am going to run a Covid relief campaign in lieu of what’s going on in India. Need help from the Global crypto community. I will take full responsibility for transparency, funds usage and regulatory compliance.”
Nailwal has explained that the funds raised would be contributed towards vaccinating half a million of India’s underprivileged youth. Within 40 hours of the announcement, the fund had raised $2.5 Mn from several noted global crypto stakeholders such as former Coinbase CTO Balaji Srinivasan, Ethereum cofounder Vitalik Buterin and Coinbase product head Surojit Chatterjee.
However, donations in crypto are bound to face legal hurdles. This is because as per India’s Foreign Contribution Regulation Act (FCRA), only NGOs with adequate certification can pool money from abroad for social work in the country. To counter this, it is expected that the funds raised in crypto through Nailwal’s mobilisation effort will be transferred to a foreign or Indian crypto exchange, where they will be converted into a fiat currency. This money will then be diverted to an FCRA-compliant organisation in India.
It is worth noting that last month, the Internet and Mobile Association of India (IAMAI)’s blockchain and crypto assets council, in a whitepaper sent to the Reserve Bank of India (RBI) and the finance ministry, had made a case for introducing regulation for crypto. In the paper, IAMAI’s crypto council — which includes various Indian and international crypto players such as Unocoin, Paxful and CoinDCX — had outlined several benefits that India would be able to reap if it introduced a law to regulate and not ban cryptocurrencies.
Crypto Can Bring Transparency To Philanthropy
One of the arguments in the paper was about how crypto could potentially revolutionise philanthropy efforts. The paper explained that donations made in traditional currency are less transparent, and are costly due to the increased participation of intermediaries, which leads to high transaction charges, especially for international donations.
According to the paper, crypto would streamline philanthropy efforts since cryptocurrencies are traceable, even through complex supply chains, because of their underlying blockchain technology. From the donor’s perspective, this would be helpful as they would be able to check where their money ended up being used. This would also boost the confidence of first-time donors and encourage them to donate money.
Today, charitable activities have several intermediaries in multiple specialised organisations that collect the money on behalf of the donors and then distribute the pooled funds among the identified beneficiaries. However, with the use of digital currencies, a donor would be able to send money directly to the digital wallet of the beneficiary or the organisation that works closest to the beneficiary.
Lastly, cryptocurrencies would enable easier foreign donations. At present, banks levy high charges for foreign exchange and money transfers, which reduces the money in the hands of the charitable organisation. But cryptocurrencies are non-geographic in nature and thus, do not attract any foreign exchange fees beyond the standard transaction charges levied on payments. This makes digital currencies a cost-effective alternative to traditional currencies for making donations.
Evidently, global crypto stakeholders who’ve been bullish about the Indian market, have found an opportunity amid India’s Covid crisis, to demonstrate one of the technology’s positive use cases.