In this article, we will discuss about Cryptocurrency Bank and the recent development happened in India in which loans are being facilitated against digital assets. In past few years, there is a rise in Cryptocurrency market not only in other countries but in India as well.
What is Cryptocurrency
It is digital or virtual currency designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records.
What is Cryptocurrency Bank
A Cryptocurrency Bank is a digital bank which will be like any other traditional which will provide the services of buying and selling of Cryptocurrencies assets and issuance of loans against digital assets.
Who Started Cryptocurrency Bank
Last year, a joint venture between the financial services companies Cahsaa and United Multistate Credit Cooperative Society, announced the launch of the world’s first physical branch of a cryptocurrency bank called Unicas in the Indian city of Jaipur. This announcement made the Unicas as the first Crypto bank in the world to open a physical branch.
Any Other Cryptocurrency Bank
Apart from Cashaa, other crypto-focused institutions such as EasyFi Network and Vauld also started their lending operations in India despite the fact that as of now Indian Government does not have any appropriate regulatory mechanism in place.
Why to take Loan From Crypto Bank
If a person is holding any of the cryptocurrencies and he want to liquidation without selling his cryptocurrencies then he/she can pledge those currencies in a crypto Bank and get the Loan. For example, if someone having Bitcoin with a value of Rs50 lakhs, then he/she can secure a loan up to 25 to 30 lakhs at an interest rate of 12-15% per annum from Crypto Bank.
How Crypto Loan Works
Crypto Banks will disbursed loans into borrowers crypto account using ‘stablecoins’ like USDT – the value of which is pegged to US dollar. The borrower can then sell the stablecoin on a crypto exchange to get fiat money(rupee, in this case) in his normal bank account. More on Economic Times.
Why Cryptocurrency is rising in India
With more and more people becoming part of rapidly growing information and communication technologies, many day to day activities are now merged online and became more flexible. A huge growth in number of virtual users giving more and more strength to the trading of Crypto Currencies. Use of virtual currency has become a reality in last few years. Cryptocurrency has started gaining the confidence of Users.
Government Stand on Cryptocurrency
Recently, Indian government has made mandatory for all the companies to disclose their dealings in virtual currency in balance sheets. Yet Government has not clarified its stand on Bitcoin and other currencies. This has embolden the companies dealing in crypto currency and hence started few branches in the Country and even started hiring for that. For example, world’s leading cryptocurrency exchange Coinbase is looking to open its office in Hyderabad. This has given the confidence that a complete ban may not be even on the cards.