With the continued rise in global popularity for digital currencies and the growing competition even as we still keep our fingers crossed for Facebook’s Libra, India seems to be moving more to the extreme left and not just against Zuckerberg’s project but the whole crypto world. It was just two weeks ago when the Indian government stated that they are not interested in what the social network is working on with a reason that the currency’s design has not been well explained and being that it is privately owned, it is something they would not be comfortable with.
The authorities in Asia’s third-largest economy, through a panel, have now issued a recommendation to ban all “cryptocurrencies created by non-sovereigns”, a move that could affect even the biggest digital currency, Bitcoin. According to the report, the whole agenda is to put a stop to the mushrooming of cryptocurrencies almost invariably issued abroad that numerous people in India have been investing in.
“All these cryptocurrencies have been created by non-sovereigns and are in this sense entirely private enterprises.” The panel in charge then went on to suggest that anyone dealing with any of the digital currencies, no matter the brand, be jailed for up to 10 years alongside facing hefty fines.
Now, this might seem to many as some kind of overkill from the country’s government but the report adds on that there is “no underlying intrinsic value of these private cryptocurrencies.” It also reads, “These private cryptocurrencies lack all the attributes of a currency. There is no fixed nominal value of these private cryptocurrencies i.e. neither act as any store of value nor they are a medium of exchange.”
This has then been explained as a major for the panel to make this tough stand that “cryptocurrencies should not be allowed” as they do not “serve the purpose of a currency.” With the negative reputation of digital currencies being inconsistent with their values and their essential functions for money, it would almost seem reasonable for the committee to state that they cannot replace”fiat currencies”.
However, the panel went on to say that they are open to supporting the possibility of a state-issued digital currency in India. This is what makes it crystal-clear that these currencies being owned privately with no regulation whatsoever is what makes it a no for the Indian government.
Despite being suspicious of decentralised blockchain technology, the committee praised it as “an important and innovative technology, which will play a major role in ushering in the digital age,” but still recommended specific legislation to promote and regulate the use of the tech in financial and associated fields.
With various cases of scams and regulatory uncertainty having infested the country and beyond over the years, the Indian government is known for having an unpredictable relationship with the crypto world. One instance is when the Reserve Bank of India (RBI) issued a notice to Indian banks asking them to stop dealing with any cryptocurrency businesses in April last year.
And even though the final decision on this draft legislation is yet to be made, it raises the question of whether other governments will rise up to draft and possibly pass similar laws.