Cryptocurrencies in India are Still Unclear
The recent weeks have been full of news of the Indian government’s stance on cryptocurrencies, while in the U.S., officials have addressed the world on the emerging sector.
Various media outlets have reported that anyone using or holding cryptocurrencies in India could be fined or jailed. Some of this may have been prematurely exaggerated for the time being, but not based on nothing.
A panel of advisors reporting to India’s finance ministry, the Reserve Bank of India (RBI), and regulators have acknowledged the potential of blockchain-driven technology but also recommended potential fines and jail time for anyone using cryptocurrencies, especially privacy-orientated ones, such as Monero.
“It’s a step in the right direction. This will finally end the economic anarchy that cryptocurrencies in India had created. With such stringent actions which include up to 10 years of jail as punishment and up to INR 25 Cr of penalty, the government will be able to contain illegal tradings.” – Supreme Court Lawyer Pal Dalmia, an advocate of banning cryptocurrencies since 2017.
The controversial recommendation to ban cryptocurrencies triggered mixed feelings across the world in the wake of the emergence of Facebook’s Libra coin, Trump’s recent Bitcoin tweet, and Bitcoin’s booming price rally since the start of 2019.
Government is Open to a State-Run Digital Currency
“The private cryptocurrencies are inconsistent with the essential functions of money/currency, hence private cryptocurrencies cannot replace fiat currencies. The Committee recommends that all private cryptocurrencies, except any cryptocurrency issued by the state, be banned in India.” – Panel’s Report
While advising that the population should go to prison for using cryptocurrencies, the panel also urged the RBI to explore the use cases of creating its own state-backed digital currency (under full control of the bank, of course) due to the secure payment architecture and capacity for streamlined, cross-border payments that blockchain can provide at scale.
It’s not all doom and gloom for crypto enthusiasts in India. High-ranking officials within the Indian government recognize the potential of blockchain to reduce fraud and enhance efficiency with handling data, including a low-cost KYC system.
On the bright side, at least the Indian government and financial authorities recognize the disruptive potential. Whether or not the population is allowed to benefit freely remains to be seen…
This is not investment advice; please always do thorough research and only invest what you are willing to lose, especially in times of uncertainty.