The Indian government is under pressure over the cryptocurrency debate. As time moves on, it is becoming hard to see how the government will be able to hold back the inevitable tidal wave of some 2.5 million bitcoin users with its current, rather tired, stance on liberalizing cryptocurrency use amongst the 1.3 billion population.
This week, again, questions were thrown at the Indian Ministry of Finance by India’s Lower House and it appears that the answers due to be forthcoming on December 28th are once more, past their sell-by date. The potential for sensible legislation has been missed once again.
The current stance is familiar to those following India’s cryptocurrency conundrum; If the following response is the result of an informed and well-presented argument by the Ministry of Electronics and Information Technology, the Reserve Bank of India (RBI), the Securities and Exchange Board of India, and the Central Board of Direct Taxes, then discussions have fallen short of the mark, as the result offers no clarity whatsoever:
“In absence of a globally acceptable solution and the need to devise a technically feasible solution, the department is pursuing the matter with due caution. It is difficult to state a specific timeline to come up with clear recommendations.”
To recap, for those who haven’t followed India’s cryptocurrency battle, local crypto traders and investors have been managing with Indian ingenuity. Since the Reserve Bank of India’s (RBI) decision last year, Indian traders are adapting as only Indians can do, and are doing it with great success too, with homemade P2P platforms and exchange adaptations using P2P trading.
In the meantime, Dabba has grown from strength to strength, profiting from the RBI ban. Working via the messaging app Telegram, with money as cash routed through the various channels in the hawala system, then passing either officially or unofficially to the foreign account where bitcoins are transacted. Payment is then made in cash or check and the deal is done: no exchange, no Indian bank.
For some exchanges, the RBI ban has had minimal impact for those choosing to announce the return of Indian rupee (INR) deposits, contrary to the government ruling in July, which effectively removed INR deposits and made withdrawals illegal. In India, there is always the potential to circumvent bureaucracy given the inclination and the incentive.
The concept of a national cryptocurrency, a Central Bank issued crypto, has come and gone, and may even return once more. Last April’s enthusiasm has turned again to caution with India’s Central Bank opting for the well-trodden wait and see approach, claiming that the industry is still in its infancy so therefore inappropriately positioned for such a bold move, despite its potential, until perhaps other nations have either succeeded or failed with similar ventures.
How India has resisted abandoning its punitive RBI legislation, given the backdrop of staggering statistics, is quite baffling, and a feat in itself. As one of the world’s largest digital economies, with 2.5 million bitcoin users, discounting all other cryptocurrencies and vibrant crypto black economy resistance seems hopeless, as one government official astutely observed, resistance is finally waning, suggesting that the government is now:
“Recognising the enormous magnitude of coming down hard on cryptocurrency across all 29 states, the research has now forced the hand of the government to align itself with India’s obvious talent in digital technology.”
He added that legislated adoption by India with support from the central bank would have “far-reaching effects throughout the world”: in other words, a waiting room full of international clients who had previously given up on India, expecting total prohibition to be just around the corner, would be first in line to do crypto business in the country.
The client base in India is huge and are more than willing to turn cryptocurrency into Satoshi’s PTP dream. The right words from the present government and the RBI have the potential to kick-start a massive surge of interest in what cryptocurrency can offer across India’s 29 states, and further invigorate an already thriving economy.
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