A Quartz report published recently states that Indian government panel headed by Subhash Garg is primarily concerned about the impact that cryptocurrencies can have on Indian rupee. However, since this is a report based on anonymous sources, we suggest you to take it with a grain of salt.
Any technology made with good intentions almost always comes with both advantages as well as risks. Cryptocurrencies are no different. Some risks of crypto are not hidden from anyone. The use of these currencies for money laundering, financing of terrorism, drug trafficking and human trafficking has already been a highly explored subject by regulators around the globe. However, if a latest Quartz report is to be believed then our regulators are more concerned about a slightly less explored risk of these currencies: the impact that they can have on fiat!
Yep. A Quartz report published yesterday states that Indian government committee working on cryptocurrency regulations is more concerned about the risk that cryptocurrencies may pose to INR. The report says this from the citation of an “unnamed, anonymous” source who recently got to meet the committee as a stakeholder from the Indian cryptocurrency ecosystem. Requesting anonymity, the stakeholder mentioned by Quartz report said:
“If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilising the fiat currency is a major concern for them (the Garg panel). 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.”
Convincing the government panel headed by Economic Affairs Secretary Mr. Subhash Garg, who is a former Executive Director of World Bank, on this particular point has been a pain for representatives of Indian crypto community. In fact, his fears have recently been bolstered by a report published by the Bank of International Settlements (BIS). The report also goes on to state that cryptocurrencies, if made mainstream, may destabilize the value of fiat currencies. Therefore, the panel wants to stick to its guns that cryptocurrencies should not be allowed as legal tender in India. Rahul Raj, founder and CEO of Koinex, commented on the report and said that it’s premature to think of these risks at this point because even in those countries where cryptocurrencies are allowed as legal tenders there has not been too much impact on fiat currencies. He said:
“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. Therefore, there is (a) considerable time before that concern even comes up.”
Besides this particular concern, the panel also has a number of other reservations around crypto, which are more general in nature like money laundering, terrorism financing and duping of gullible investors. These seem more genuine concerns, and fortunately it’s easy to find a solution for them by including strict KYC and AML measures in cryptocurrency regulations.
Mainstream media’s reports based on anonymous sources have always been a subject of debate. Especially in case of cryptocurrencies the media has been shown to have a negative bias. Since this Quartz report is also based on anonymous sources, we suggest you to take it with a grain of salt. While there’s no denial in the fact that Indian government doesn’t want to make cryptocurrencies legal tenders in India, it’s not necessary that this is the reason behind it.