Can India Afford To Ignore Bitcoin? Bernstein Asks In A Latest Note

While Bernstein rejoices the newfound global crypto optimism post-Trump election win, Bitcoin has breached its all-time high, but as the world’s fifth largest economy and the largest democracy, can India afford to ignore Bitcoin, Bernstein asked in its latest note.

It wondered whether leading Indian asset managers can follow global peers in launching Bitcoin ETFs; and also talked about the role Indian regulators should play going ahead. While it has more questions than answers, but they attempt to suggest a Bitcoin pathway for India. 

The Big US Shift Towards BTC and Crypto

The US just elected its first crypto-friendly President-Elect Trump. He has promised a new future where US would be the Bitcoin and crypto capital in the world. There is an intent to make Bitcoin a national strategic reserve that would never sell any Bitcoin held by the US government and acquire new Bitcoin.

Bernstein noted that India's crypto narrative has been caught in this false premise of Central bank digital currencies (CBDC) and what the government calls ‘private crypto’. 

"This framing is its own pitfall. India led the world in global payments and fintech with the success of UPI, today, the world’s largest payments network by number of transactions. The next logical path would be a CBDC which would digitize the rupee and further expand the India digital stack as a monetary tool for the government," Bernstein said. 

However, framing Bitcoin as a private currency missed the strong proposition of Bitcoin as a ‘store of value’ asset in a world dealing with looming inflation, record US debt, fiscal lack of discipline and geopolitical risks. 

‘The Digital Gold’

While it noted that India has emphasized growth of its gold reserves, from 557 Tonnes to 854 tonnes (53 percent growth) over the last decade and it has de-risked gold custody by moving almost 100 tonnes of Gold back to India from the UK. it also included that Bitcoin is a way for governments to build ‘Digital Gold’ reserves, without the risk of censorship by nations that physically custody gold, in a world where international relations are fragile and dollar reserves are subject to US fiscal risk.

Bitcoin Policy Is Urgent

It has encouraged the Indian government to work towards a national Bitcoin policy, as part of broader crypto policy. It stressed that Bitcoin is urgent as global asset managers, international governments, and corporates run towards acquiring Bitcoin as a strategic asset. 

"Crypto policy is complex and may take time to build consensus, but Bitcoin policy is urgent and of national strategic importance," Bernstein said.

It stated that Indian asset managers should consider participating in regulated Bitcoin and crypto products. Their role in ensuring safety and compliance for Indian investors is crucial, as the retail demand for crypto investing continues to grow.