India: Regulatory Bodies Fear Cryptocurrency’s Impact on Rupee
According to a Quartz report published February 4, 2019, the Indian government is skeptical regarding the possible implications of cryptocurrencies on the Indian Rupee, fearing that digital currencies might destabilize the national currency.
Regulatory Panel Hesitant of Cryptocurrencies
The Indian government has long had a strict stance towards cryptocurrencies, often citing the possibility of them being utilized to orchestrate illicit activities like money-laundering and financing terrorism operations. Furthermore, regulatory and judicial bodies in India have continually deferred taking the final call on the legal status of digital currencies.
The latest development, or lack thereof, is that the regulations drafting committee spearheaded by the top bureaucrat Subhash Chandra Garg, is not entirely sure of the impact digital coins will have on INR assuming they are allowed for making payments in the country.
The committee was established in November 2017 under the supervision of Garg, the Economic Affairs Secretary of the Indian Ministry of Finance. Per the report, the panel is in the final stages of drafting regulations for cryptocurrencies in India.
A source close to the matter who requested to remain anonymous, told Quartz that the assessment of the overall impact of legalizing cryptocurrencies on the Indian financial ecosystem has been a big challenge for the panel. He added:
“If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilizing the fiat currency is a major concern for them (the Garg panel).”
Rahul Raj, the founder of Indian cryptocurrency exchange Koinex, told the media outlet that until blockchain technology is able to scale to global payment behemoths like Mastercard and Visa, chances are slim that cryptocurrencies would have any substantial impact on the overall financial ecosystem of India.
The Crypto-Terrorism Narrative
Skeptics of digital currencies have always ensured to highlight the possibilities sorrounding cryptocurrencies and the financing of illicit activities. While digital currencies can be used to execute heinous activities, so can fiat and gold. Turning a blind eye to traditional financial instruments to prevent the wave of disruption can severely hamper the collective growth of the society, and India is a prime example of that.
In fact, uncertainty with regard to the legal status of crypto has resulted in a myriad of scams and Ponzi schemes in India which have duped helpless people to the tune of millions of dollars.