Written by 10:46 am Cryptocurrency

cryptocurrency sectors: Economic Survey 2023 flags FTX collapse; highlights need for common approach to regulate cryptocurrencies

Finance Minister Nirmala Sitharaman tabled the Economic Survey for the ongoing fiscal in the parliament ahead of the Union Budget 2023-24. The Survey highlighted the need for a common approach for regulation of cryptocurrencies, adding that an unregulated crypto market is challenging the financial systems around the world.

It also said that India’s e-commerce market is projected to post gains and grow at 18% annually through 2025, citing Global Payments Report by Worldpay FIS.

Read | Economic Survey 2023: measures to help startups flip back to being India domiciled

ETtech looks at some of the key highlights from the Survey for ecommerce and cryptocurrency:

For e-commerce
■ Government’s push to boost the digital economy, growing internet penetration, rise in smartphone adoption, innovation in mobile technologies, and increased adoption of digital payments has accelerated the adoption and growth of e-commerce.

■ According to the Global Payments Report by Worldpay FIS, India’s e-commerce market is projected to post gains and grow at 18% annually through 2025.

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■ Fiscal support during the pandemic helped boost e-commerce penetration in rural areas.■ E-commerce industry focusing on local solutions to penetrate rural areas by strengthening the network of rural distributors and retailers and using local distribution centres as pick up-drop off points, enabling logistics companies to serve rural consumers.

■ As per the latest report ‘How India Shops Online 2022’ by Bain & Company, emerging categories – fashion, grocery, general merchandise – would shore up e-commerce growth in India and would capture nearly two-thirds of the Indian e-commerce market by 2027.

■ As per the Retail and E-commerce Trends report released by Unicommerce and Wazir Advisors, overall e-commerce order volume witnessed a growth of 69.4%% YoY in FY22, driven mainly by consumers from tier-II and tier-III cities in the last two years.

■ The Government E-Marketplace (GeM) has also witnessed tremendous growth in Gross Merchandise Value (GMV) and is catching up with E-commerce giants like Amazon and Flipkart. GeM attained an annual procurement of Rs 1 lakh crore within FY22, representing a 160% growth compared to last FY.

Recommendations for crypto industry
■ Recent collapse of the crypto exchange FTX and the ensuing sell-off in the crypto markets have placed a spotlight on the vulnerabilities in the crypto ecosystem.

■ The increasing importance of crypto exchanges, wallet providers and crypto conglomerates could force regulators to consider them as systemic financial market infrastructures.

■ The fact that cryptocurrencies are yet largely unregulated is a cause for concern globally.

■ Global standards on cryptocurrencies need to be comprehensive and consistent; regulatory responses must be based on standard taxonomies and reliable data to address contagion effects; and must be flexible enough to be adjusted in the future based on market developments and future international standards.

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