Implementing crypto assets in a nation’s ecosystem comes with a lot of baggage. Primary drawbacks of cryptocurrencies are money laundering, terror funding and hacks. But another issue is addressed by an Indian governmental committee, which is less-explored trouble.
A high-level panel tasked with drafting rules for India’s virtual currency ecosystem is worried about the potential effects of enabling cryptocurrency in the country especially for payments. The panel is concerned about the possible disturbance in the stability of Rupee’s economy due to digital assets. The government panel is led by the Economic Affairs Secretary of India, Subhash Chandra Garg. Garg has also worked as Executive Director at the World Bank. The panel was formed in November 2017. Notably, Garg is in advanced stages of outlining regulations for cryptocurrencies in India.
Regarding the government’s concern, a representative from the cryptocurrency ecosystem who met the ministers recently, said (requesting anonymity),
“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).”
He notes that it is not figured out that what will be the overall impact of cryptos on the financial ecosystem of the country. He adds that it has been a challenge to convince the panel on this particular point.
Such concerns have come into the picture because of a report made by the Bank of International Settlements (BIS) in March. The BIS is a club for the world’s central banks. Based in Basel, Switzerland, the BIS is majorly focussed on the subjects like the stability of the global financial system. Notably, Reserve Bank of India (RBI) is a member of the BIS with 59 other central banks. The report by BIS suggests that even central bank-issued digital coins can destabilize traditional banks if they are provided on a large level to the general public. However, the crypto believers are still seeking the approval for cryptos in India.
In India, the use of cryptocurrency has been almost under a ban. But, in the last month, the report shows that the governmental committee considered the idea of legalizing crypto assets.