The promise of Blockchain & Crypto: A divided financial community amidst a lot of promise

Crypto and blockchain

Today the finance community is divided between the impact of Blockchain and the transparency in the value of cryptocurrency.

In 2017, when the price of Bitcoin began to rise and hit the $20000 mark, there was a sudden spike in the narrative that a decentralised finance system will change the way money was exchanged and traded, in the process taking power away from intermediaries, such as banks, that held and lent money for centuries. 

By the end of 2017 around $950 million was invested in the ecosystem, as reported by TechCrunch. The amount of VC money that went in to support crypto in 2021 was $33 billion. This is a 33x jump in the yearly contribution by VCs according to Galaxy Digital

Aanchal Thakur the CIO and co-founder of Spherium says,

"Being a chartered accountant helped me quite a lot because the whole space of blockchain is about the power of decentralised systems over currently popular centralised systems. Spherium is creating a decentralized and borderless financial system. 

There are two types of blockchains, the underlying technology on which crypto runs; private and public blockchains. It is a very nascent industry. You have to start exploring the space to be able to understand what you are putting your money into."


Quote 5A finance professional needs to understand how Blockchain handles a triple entry book-keeping system as well . In a Blockchain system the auditing will be automatic,Quote 7 - says Aanchal.

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The impact 

According to KPMG, Blockchain clearly will have a significant impact on the finance function, and most organizations will gradually adopt the technology as they envision a new operating model for finance. 

KPMG anticipates the following key trends:

  • Blockchains will connect to existing financial systems. Despite the benefits of blockchain, it will not replace traditional ERP systems overnight. Rather, distributed ledgers initially will supplement the systems of record, specifically in cases where balances are frequently recalculated as transactions occur. And while blockchain enables a real-time view of data, the integration with legacy systems may cause a delay in harnessing the ultimate value of the distributed ledgers.
  • Blockchains will be a hybrid of private and public ledgers. As blockchain technology evolves, KPMG expects finance organizations to start with private blockchains—such as a ledger shared within a company or shared by a  company and a vendor—which will enable them to retain sensitive data while gradually embracing more public ledgers. These could include permissioned blockchains for industry consortia and other entities, as well as truly public blockchains that operate in an open marketplace. 
  • The regulatory environment will remain in flux. As blockchain decentralizes financial activities, governments will continue striving to understand and regulate the technology. And those that do so effectively will have an opportunity to attract global investment and become frontrunners in a blockchain economy.

Arun Pazhayannur of BlockZero, a boutique consulting firm specializing in the evolution of the financial infrastructure through digital assets, says,

"There is some sort of a negative connotation about crypto. That is why we use the word digital assets. We are a consulting platform where we help companies transition into the digital assets space. Every corporation in the world wants to dabble with crypto and is looking for stability in their treasury operations.

We have requirements for new companies wanting to learn about crypto infrastructure and how it has to be set up. The crypto exchange needs crypto custodians, insurance companies, banks to support transactions and you need technology players."

Blockchain brings various stakeholders together. In an organisation, for example, shareholders would know what has happened to every document, and neither management nor an external party can tamper with it.  

Kartik Radia, Managing Partner of Mazars India says,

"Blockchain will not allow you to go back and open up previous financial years' statements and tamper with them. The entries have to be allowed by all stakeholders, and there will be a timestamp. And once a block gets closed, the block is nothing but a cluster of data. This form of system will bring transparency, it will bring security, it will bring governance."

Quote 5Governments and Central banks want to kill this currency. But, it has still survived to this day because of its immutable nature and because of its value proposition that it provides through a Blockchain system, one need not trust any single authorityQuote 7 - says Arun of BlockZero.

What of Cryptocurrency?

According to Deloitte as blockchain, digital currencies, and initial coin offerings (ICOs) continue to surge in popularity, governing bodies across the globe are scrambling to establish standardized regulations—an arduous task, to say the least. 

Not only is today’s digital currency landscape completely uncharted terrain, but new variables are being introduced at a breathtaking pace, continually changing the digital currency landscape and, in turn, the most obvious regulatory path forward.

Despite this uncertainty, one constant is slowly emerging: the notion that digital currencies be regulated and that certain players in the ecosystem be subject to anti-money laundering (AML) and counter-terrorist financing (CTF) requirements.

For banks hoping to get ahead of the inevitable regulatory changes, revisiting internal AML and CTF guidelines in the context of digital currencies would be a good place to start.

At the most preliminary level, this means exploring whether it makes sense to allow digital currency exchanges to become banking customers.

Similarly, banks should consider whether they will allow existing customers to transact with digital currency exchanges, and how to deal with customers that engage in token sales.

“Will banks choose to avoid banking virtual currency exchanges? Will they allow their customers to transfer money to and from exchanges? Which products (e.g. credit cards) will be used to transfer money to and from exchanges? These are all questions they must answer, as they move forward in this new virtual environment,” says Sandeep Chopra, Senior Manager, Risk Advisory Deloitte.

Banks need advanced data analysis techniques that can help analyze relevant data and network activity to identify unusual trends and activity patterns, such as:

  • High-velocity transactions
  • Unusual transaction amounts
  • Unbalanced in-and-out activity
  • Accounts that predominantly include cryptocurrencies
  • High-frequency transactions with different exchanges

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Neeraj Khandelwal, the co-founder of CoinDCX says

"In crypto, we are in the 1998 era of the Internet? In terms of the development of the technology as well as adoption.

You look at the graph of Internet adoption. From 1993 to 1998, it was steep. Even today it is very steep. But crypto’s adoption graph and the technology development resemble this very same graph.

And we are at a nascent phase of crypto where the next set of Google, Amazon, and Facebook are yet to be born. A lot of investments are happening across the globe for the technology development itself.

We have come a long way in the last five to seven years in terms of scaling.

How many transactions per second can this technology handle as of today? How much data can it store? and How many parallel concurrent users can it entertain?

So all these are critical outputs of the technology development and they are under heavy growth rate as of today."

However, not all are convinced of the promises made by cryptocurrency about stability and transparency

Cryptocurrency today is regulated the world over. In India, it is taxed at 30 percent.

In China, it is banned. And in the USA it is taxed at 15 to 20 percent. 

Robin Banerjee, an author, and a corporate leader, with books such as ‘Who Blunders and How’, ‘Who Cheats and How’ is not convinced of crypto and its underlying value.

He has been a crusader for transparency and he talks about it in his book ‘Corporate Frauds - Business Crimes Now Bigger, Broader, Bolder’. 

"Crypto is not a currency. Currency is a store of value. What is the underlying value of these digital currencies? Cryptocurrency is speculative in nature. Who knows how these creators of crypto have determined the value of currency.

Currently every currency's value is determined by demand and supply. If the demand and supply interjects, that is the place at which the price is determined.

What is the demand for cryptocurrency? Who knows? The Reserve Bank of India very clearly said it needs to be regulated. For me, I believe most crypto currencies are illegal and the only way to control this is to tax it and the government of India has done this." Robin says.


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