India’s COVID relief efforts got a big push from the crypto community yesterday, when Ethereum co-founder, Vitalik Buterin, donated a billion dollar in joke coins to a crypto-based relief fund. The fund, called India Covid Relief Fund, was started by crypto entrepreneur Sandeep Nailwal and has a community of over a thousand people helping with various operations right now. The fund was started late last month, and this is the fourth donation that Buterin has made to the fund, and the second time he donated a memecoin, though this time he used the Shiba Inu coin. His earlier donations were in Ethereum, MakerDAO coin and Dogecoin (another joke cryptocurrency).
What is Shiba Inu coin?
Shiba Inu (SHIB) and Dogecoin are both joke cryptocurrencies that were born off Internet memes, which is why they are called memecoins. They have no backing from serious crypto investors and had no real purpose for their creation. In fact, Dogecoin is the original memecoin and Shiba Inu was created as a “Dogecoin killer”.
In fact, Dogecoin started getting its value when billionaires like Elon Musk and Mark Cuban started tweeting about it. It gave these coins a credibility they didn’t have before, and much like the rise, Musk’s appearance at Saturday Night Live last week, where he called Dogecoin a “hustle”, tanked its value almost immediately.
When the creators of SHIB made the cryptocurrency, they transferred 50% of the coin’s supply to a public wallet held by Buterin. It is these coins that Buterin transferred to the India Covid Relief Fund — a total of 50 trillion SHIB coins.
Is it really worth a billion dollars?
Technically, yes. When Buterin transferred the coins, they were worth about $1.14 billion. However, that doesn’t mean that that’s the real value. As mentioned before, Buterin controlled 50% of the SHIB supply, meaning the moment he dumped these coins, it tanked their value by as much as 30%. The price has risen again, and it was worth around a billion dollars at the time this story was written. However, it tells you that the real value of these coins will depend on when they are cashed.
How will India cash it?
Cryptocurrencies drive their value from the fact that people want to buy them. Which means that the only way to convert crypto to fiat currency is by selling them to people who will pay real money for them. The legal and most common way to do this is via exchanges, where transactions are tracked.
As reported by Mint, the India Covid Relief Fund has set up an entity in the United Arab Emirates (UAE), which converts crypto to fiat. This entity trades on various exchanges, like Coinbase etc, and converts the crypto to dollars, which is transferred to its bank account. It then transfers this money to Foreign Contribution Regulation Act (FCRA) approved NGOs in India, who then pay the right vendors.
Is that legal?
Yes. NGOs in India are legally allowed to receive donations from overseas, as long as they are compliant with the FCRA regulations. Lack of regulatory clarity in India keeps many banks from dealing with companies and entities who deal in crypto often. In this case, the fund is making a lot of money in crypto, so it has gone to UAE, where banks are more friendly towards such payments.
So the India Covid Relief Fund can actually do what it’s doing. The Fund’s website says that it has made a Rs. 7.4 crore donation to startup driven ACT Grants, which aims to donate over 50,000 oxygen cylinders and concentrators to COVID relief efforts in the country. The Fund has also made contributions to other NGOs, to provide cylinders, concentrators and ventilators.