We’re most definitely at a stage where corporations and governments around the world are moving their financial services up to the Blockchain. Standing at this point, India, however, might be at the risk of ceding ground to other countries that have already opted cryptocurrencies rather than outlawing them.
Although, there have been reports back in 2017 that the Reserve Bank of India (RBI) was actually considering a proposal to introduce its own digital version of the Rupee akin to Bitcoin; the token was to be called Lakshmi. But that idea died a premature death last year when RBI, much contrarily, proposed to bar banks and financial institutions from dealing in cryptocurrencies. That’s not the end of it. This year in July, an inter-ministerial panel, set to study Bitcoins, led by the top bureaucrat Subhash Chandra Garg, recommended holding cryptocurrencies a crime that would put one behind the bars.
Such stringency of crypto laws is rather myopic. The phase India is in right now demands more openness to the possibilities of using cryptocurrencies for international transactions bypassing the dollar. Even more so, as the world now desperately needs to get out of the U.S. dollar’s stranglehold.
On the contrary, India, considering its current political and economic scenario, could be well poised to become one of the first nations to entrench the credibility of digital currency as an alternative to the existing monetary system. There are a couple of strong reasons that might make India the first to regulate cryptocurrency.
The foremost major factor would be India’s huge unbanked population. Although the country happens to be the world’s 7th largest economy with a GDP of $2.5 trillion, a 2016 study reported that as much as 233 million Indian citizens or a hefty 40% of its population, still has no bank account or financial record. This mass completely relies on cash, which hinders their transaction abilities. Cryptos, on the other hand, make international transactions quick, cheap, seamless, and securely—without the need for a bank account.
In addition, another report cites that last year, over 500 organizations in India, including five of the country’s largest companies like Dell, accepted cryptocurrencies as a mode of payments. Also, a recent Forbes article states that Bitcoin’s craze in the country is gaining unprecedented momentum, and, to date, there are more than 600,000 crypto users in India.
Despite repeated warnings from the RBI regarding cryptocurrency use and its perils, a steering committee report by the finance ministry, released in September, encourages the positive impact of Blockchain technology, which empowers from cryptocurrencies to fintech. Even last year, the government has formed an inter-disciplinary committee to further study the framework of virtual currencies, alongside setting up a government forum for public opinion on such digital assets.