Are Indian fashion brands ready to accept cryptocurrencies as payment options?

Creatives in the Indian fashion industry are aiming for a digital financial future, though it isn’t without its set of challenges

Bitcoin launched in 2009 and a select (read: very smart) bunch of people decided to invest in it. Those who did received payouts as the cryptocurrencies grew and eventually crashed.

Over the course of the past couple of years, metaverse, cryptocurrencies, NFTs and blockchain technology have become buzzwords. If you pay close attention, you’ll realise it’s no longer a small section of society that’s talking about Web3.

In the last month, Burberry partnered with Mythical Games to launch their NFT collection as a part of their ongoing collaboration with Blankos Block Party. Prada, too, dived into Web3 with their first solo NFT as a part of their Timecapsule initiative. Even model Bella Hadid launched her NFT collection called CY-B3LLA. In India, brands like Tanishq launched its wedding collection titled ‘Romance of Polki’ in 3D display zones on the metaverse, and designer Shurbhika Sharma of Papa Don’t Preach showcased a six-piece collection in the metaverse. After NFTs, the fashion industry is slowly venturing into cryptocurrencies–the future of digital payment. While major luxury brands like Gucci, Balenciaga and Off-White have started accepting cryptocurrencies, how long is it before Indian brands follow the trend?

With the signs of recession looming ahead of us, coupled with the crash in the crypto market (last week itself the global crypto market cap crashed to $872 billion, according to data on CoinMarketCap), we speak to some experts to understand if the Indian fashion industry will play the wait-and-watch game or follow the footsteps of international labels into accepting cryptocurrencies as a digital payment option.

Currency of a digital future?

This year, major brands across the globe have taken a giant leap towards Web3 and blockchain technology. One of the forerunners has been the late designer Virgil Abloh who, prior to his death last November, was reportedly working on a Decentralised Autonomous Organisation (DAO). This year, his brand Off-White took a step towards the digital future by announcing that it will start accepting cryptocurrency payments at its flagship stores in London, Paris, and Milan, cementing the brand as one of the first luxury labels to exchange physical fashion for digital currency. Another brand that started accepting cryptocurrencies soon after is Italian luxury giant Gucci who accelerated their journey towards Web3 in May by announcing that it will start accepting cryptocurrencies in a selection of its stores in the United States. Other brands like Balenciaga and Givenchy soon followed suit.

The recent steep crash in the market hasn’t stopped luxury brands to foray in the direction of cryptocurrencies. Swiss watchmaker Breitling added BitPay’s cryptocurrency payments service to their website. TAG Heuer and Hublot have made similar announcements of late. United States-based athleisure brand Alo Yoga will let employees convert their salaries into cryptocurrencies.

While the west is eagerly lining up to make the bold move towards the uncharted digital future, where do Indian brands stand? The allure and curiosity surrounding cryptocurrencies is building among the millennials and Gen Zers; however, very few brands have actually taken steps towards this digital future. The Rug Republic–an Indian home decor label–is one of them. The family-owned company became one of the first few Indian retailers to start accepting cryptocurrencies as a payment option. “The idea was to make a symbolic gesture to show that the Indian entrepreneurial community is willing to put their money where their mouth is and actually transacting it, not just talk about it. The whole idea was that, hopefully, if this catches some wind in the news, then other people will take that step too. And that is exactly what happened,” says Raghav Gupta, director of e-commerce at The Rug Republic.

Gupta’s assessment is perhaps accurate when it comes to grabbing eyeballs by making a bold move with cryptocurrencies. Bollywood’s favourite fashion designer Manish Malhotra is working towards it. “If the newly affluent customers are ahead of time, then brands need to be ahead or at par with them. From our side the efforts are on and implemented towards adopting and embracing the evolving blockchain development,” says Malhotra, who launched five exclusive NFTs, one of which was sold for 3,000 WRX (native token of WazirX based on the Binance blockchain) that roughly amounts to ₹2.8 lakh.

Many Indian entrepreneurs are positive that cryptocurrencies are the future when led into Web3 and metaverse. One such start-up company betting on the future with the concept of ‘fashionfi’ is BitLiberte, which recently raised $1.76 million to establish an ecosystem for NFTs and DAO. “With BitLiberte, we are launching a new concept called ‘fashionfi’ which brings fashion and finance together, to create a DAO-based system for fashion outlets in India. What this means is that people will be fractional owners of our design physical stores and this will be done by NFTs and metaverse assets,” explains Vaibhav Seth, founder and CEO of BitLiberte.

While blockchain technology is an exciting future that many entrepreneurs are aiming their growth towards, the limitations of digital infrastructure make it seem like a distant dream for Indian consumers.

The challenges involved

Although the bulk of crypto industry advancements has occurred in the virtual realm, there are major shortcomings when it comes to accepting cryptocurrencies by a large consumer base due to its volatility. “If you look at small and medium businesses, they are not so comfortable with volatility just because of the stage that they're in. Yes, big brands are getting into it but they're also in concentrated spaces of only three to four stores, that too, only in the United States. No one is accepting it outright everywhere,” Gupta explains.

But that’s not the only issue. Gupta points out that the onboarding process itself is not easy as there’s a lack of a decentralised wallet that can actually execute a transaction easily. “While there are products being made for cryptocurrency gateways on retail sites, it’s not an integrated system. We don’t have a product or a system in India yet which, in one click, can integrate the website to a crypto payment gateway,” he says.

Another issue lies in not having regulated laws for cryptocurrencies. Only recently the Finance Act of 2022 added a new provision to the Income Tax Act of 1961 which requires the buyer of a virtual digital asset (VDA) to guarantee that tax is deducted at source (TDS) at a rate of one per cent of the transaction price. Designer Raghavendra Rathore believes that the wheels will only start to turn once the government gives it a clean push. “Presently the crypto market is in free fall and needs energetic governance. The logical adoption of the Blockchain technology by modern banks is a tell-tale sign that the time is not too far when homegrown luxury brands will accept cryptos as payment,” says Rathore, who, like Malhotra, launched a collection of NFTs with WazirX.

Seth believes that while the Indian crypto market is one of the fastest growing crypto markets in the world, it’s a slow progression as the key lies in educating the consumer, especially the older generation who remain skeptical about cryptocurrencies. Post demonetisation, the mindset of the Indian consumer has drastically changed towards cash-based expenses. Here’s hoping cryptocurrencies ride that wave to become a success story in the times of our world’s digital transformation.

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