You may have seen in the news at this time a great amount of media attention being paid to the fact that the Indian government is attempting to put their foot down on cryptocurrency, for various reasons. Articles throughout the web cover this issue piecemeal but here, you can read an overview of exactly what issue India is taking.
So why exactly is India’s boot over the neck of private crypto? Why are words like digital rupee being bandied about? And what exactly does this mean for crypto outside of India?
The bulk of the issue that India takes with cryptocurrency boils down to the fact that is inherently non-sovereign. The private nature of these cryptocurrencies is what they take umbrage with, and the fact that the cryptocurrencies are beyond the government and crown’s regulation poses a problem for India’s economy, as many wealthy Indians are investing in these privately regulated currencies that are international and in almost all cases issued from overseas owners. The ostensible argument they make is that the idea of a private currency is incoherent with the very concept of a currency and cannot replace a fiat currency purely on the basis that they aren’t issued by the state.
They make an argument that investing in currencies such as Bitcoin furthermore put investor’s money at risk, but realistically this is merely a cover and the actual reason for their opposition to crypto is because the investment of some of India’s richest and most successful is going into foreign currencies rather than India’s own, devaluing it on the international stage.
A government panel controlled by the Finance Ministry (created by India’s Ministry of Electronics and Information Technology, Securities and Exchange Board, and Reserve Bank) has suggested a punishment ranging from fines to ten years of imprisonment for cryptocurrency usage in India. Outlawing conventional crypto with measures as severe as this seem absurd for the use of an otherwise legal and privately-owned service, especially considering how groundbreaking crypto is with regards to encryption, secure transaction, and the feasible effective transfer of large amounts of funds within a business environment.
Crypto’s Current Status in India
As of July 19, following a statement by Minister of State for Finance Anurag Thakur, no government measures against cryptocurrency use or towards creating a digital rupee have been levied. Apparently, it is difficult to levy any charges as cryptocurrency use does not violate any pre-existing laws in India enforced by the Reserve Bank of India or other authorities, so they are not currently actionable offences until a new law is drafted.
Despite this the government still does not recognise cryptocurrencies as legal tender, and so there is still a significant barrier to crypto’s use in India. Meanwhile, they have also expressed that they are open to a government-controlled sovereign Indian cryptocurrency. They believe it could be beneficial to the county and would improve the speed and security of India’s current payment infrastructure, most notably in the field of overseas international payment.
Leaked Crypto Bill
A leaked bill regarding the prohibition of all crypto besides a digital rupee suggests that India is well on its way to debating outlawing unauthorised crypto permanently. This unverified document lists cryptocurrency as “any information or code or number or token not being part of any Official Digital Currency, generated through cryptographic means or otherwise, providing a digital representation of value.”
It then suggests a digital rupee to be issued by the Reserve Bank to be accepted as legal tender. It makes it abundantly clear that “No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use Cryptocurrency in the territory of India.”
A surprising but favourable caveat in this is that the use of DLTs or other ledger technologies for the purpose of education and research are exempted from these measures provided no cryptocurrency exchange for the purpose of financial transaction is enacted. Nor are there any punishments for creating a financial network with DLTs provided no exchange of the outlawed cryptocurrencies take place along these channels.
What Does This Mean For Crypto’s Future
The question that is therefore begged by this whole affair is in what light this paints crypto internationally and what the future may hold. It is unlikely that any Western countries will follow suit with India and outlaw the use of private crypto. India’s reluctance to outlaw the technology, only the currency which holds the value, illustrates that even they concede how ground-breaking crypto is and the bright future the technology paints for encrypted transaction and the movement of money internationally at a macro scale.
What we may, however, see is the rise of other sovereign cryptocurrencies in other nations, both Western and Eastern. The sheer convenience and security of crypto for large scale international transactions would make a nationalised sovereign cryptocurrency valuable and effective for government use in itself, while creating a national cryptocurrency for big investors to use would manage to drag at least some measure of cryptocurrency investment’s profit back into the country’s economy. We could furthermore see the rise of national cryptocurrency in somewhat more economically radical and totalitarian states such as communist China purely for the control it would offer them over national finance even in the digital datascape.
Is My Crypto In Danger?
It is undeniable that the recent trend of investment in private non-sovereign currencies by the highest echelons of society deprives national currencies of large amounts of money and devalues them. Even for Western nations and currencies this could be interpreted as damaging in the long term. However, the town criers and pseudo-demagogues crying doomsday and the collapse of national currencies and economies because of the advent of private currency in the digital mediascape are being overdramatic.The sheer fact of crypto’s value per unit being so high makes them almost useless for everyday transactions, and it is the transaction on the ground level that sustains sovereign currencies, the going to the shop for groceries and the buying of petrol, not the purchasing of multi million dollar multinational company shares, that sustains a fiat mint. As a result, you can rest assured that the death of private crypto is far beyond the foreseeable horizon, and the outlawing of crypto in India, even if it does get passed, does not signal a domino effect on an international scale. So keep trading, keep investing, and keep trusting in the bright future crypto paints for finance on a global scale.