Even after multiple appeals by the crypto enthusiasts and the traders, investors and crypto-business owners in India, the Reserve Bank Of India (RBI) stood stringent on its plan of barring cryptocurrency transaction in the country. While the decision over the plea against RBI’s crypto ban is still pending, the news is making the rounds that the authorities are considering introducing a native cryptocurrency.
A finance ministry panel constituted by India’s finance ministry and supervised Subhash Chandra Garg, secretary, department of economic affairs was set up in December 2017 to research and conclude the regulatory measures India should take in regards to cryptocurrencies. The aforementioned report was to be submitted in July but was pushed to the end of the year.
A publishing qz.com quoted a senior government official privy to the discussions of the panel:
“We are evaluating the government-backed cryptocurrency and crypto-token. And we are looking to develop and encourage our own research and development of blockchain technology.”
Government Backed Cryptocurrency
A few days back, an annual report released by the RBI did express that they are testing waters to identify the feasibility of a Rupee backed coin. The Central Bank of India has formed a multi-department panel that is looking into the matter related to cryptocurrency. Notably, officials were shipped off to US, Japan, and Switzerland to study cryptocurrency and ICOs
While the crypto-ecosystem in India hopes that such plans solidify sooner than later, the authorities haven’t budged on their decision of banning Indian banks and financial institutions to support any crypto related transaction and transactors including cryptocurrency exchanges and traders.
The publishing notes that the government representatives were studying the implication of launching and managing a government-backed digital currency way before the crackdown. The officials sat down with bitcoin exchanges to understand the integrities involved in the same, the publishing quoted a person from the cryptocurrency community privy to the details of the meetings, an executive who requested anonymity:
“If a virtual currency is going to be backed by the government then it goes against the whole grain of such coins. These are essentially decentralized ledgers, and if the government or the RBI is trying to control it, then it loses its meaning.”
The government officials revealed an alarming information regarding the government plans, he states that the government may decide to kill or ban the existence of other digital currencies, as and when they roll out a government-backed cryptocurrency. He said:
“The panel is also discussing amendment of the Currency Act to make possession of any cryptocurrency, not approved by the government, a punishable offense.”
This somehow reveals RBI’s long-term strategy behind exercising the cryptocurrency ban since July.
Trading took a hit after the Ban
Definitely not a surprising statement, following the ban major affliction could be observed over the cryptocurrency exchanges. In particular, the countries biggest cryptocurrency exchange, zebpay closed its shop last month, seeing that the legal battle is not going to come to a conclusion soon.
Although the stringent rules are not extended towards the underlying technology of the cryptocurrencies as the Indian government has shown a considerable incline towards using decentralized networks for various purposes.
The emergence of the stablecoins
The idea of introducing a government-backed digital currency is not a new one. Following a country wise massive economic crisis, Venezuela has pioneered and launched Petro, the world’s first government-backed digital currency. The world’s second-largest crude oil producer has backed the currency with oil.
According to a report, Iran might soon follow Venezuela’s footstep, facing an economic crisis of similar shape and size. Whereas India seems to be following suit, reportedly the name of the digital coin has also been suggested. Appropriately named after the Hindu goddess of wealth, the currency will be called Lakshmi. RBI deputy governor BP Kanungo said at a conference in April:
“This will be in addition to the paper currency that we have. It also holds the promise of reducing the cost of printing of notes.”