Cryptocurrency and India haven’t been on the best of terms since a long time. The country’s regulators approach towards the digital assets has had been tinted with the associated risks such as money laundering and terrorism funding.
A panel of high-ranking officials, specifically built to study cryptocurrency and to formulate the draft of cryptocurrency regulatory framework for India are now concerned over the impact if cryptos on the local currency Rupee. However, the support of the ecosystem believes that the Indian government has been trying to downplay cryptocurrency’s role in the future of money when they should be looking into establishing ground rules for integrating it into Indian society.
Crypto’s effect on Indian Rupee
Lead by Subhash Chandra Garg, the economic affairs secretary in the ministry of finance, the committee has been looking into drafting cryptocurrency regulations. Reportedly, initially set in 2017, the committee is now quite close to releasing its crypto regulatory framework.
According to the insiders, the panel is extremely concerned over allowing cryptocurrency payments as this action could dramatically affect the price of their national currency, the rupee. Reportedly the committee met with an anonymous representative of the nation’s crypto ecosystem, who stated the concerns of the ministers by:
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).
The anonymous representative also added:
The overall impact on the financial ecosystem that it is likely to have is still unclear and it has been a challenge to convince them on this particular point.
The Indian crypto community begs to differ
While allowing crypto payments in India will indeed have some sort of impact on Rupee, experts believe that the subsequent effects will only surface as and when greater crypto adoption happens. Rahul Raj, the founder of the Indian cryptocurrency exchange Koinex, asserts that it is too early to worry about the impact as it will be a ‘considerable time before that concern even comes up’.
At this point, it may be a bit premature to worry about this as right now even globally only a handful of payments are made using virtual currencies and that will be the case till blockchain reaches the scale that say Mastercard or Visa have.
To say the least, India has been full of mixed signals in terms of cryptocurrency integration in India. Where the government is superbly concerned over the effects of cryptocurrencies and the Indian Banks Are Forcing Customers to Comply with Anti-Cryptocurrency Policy. Major conglomerates of the country are foraying into the zone by adopting the blockchain technology, just recently Mahindra Employs Blockchain Technology for Grapes Export Business and Reliance Industries Acquires 5.56% Stake In UK Based Blockchain Startup.