A panel created by the Ministry of Electronics and Information Technology, the Securities and Exchange Board of India, and the Reserve Bank of India, suggests an “open mind” towards governmental cryptocurrency, however proposing an entirely opposite approach towards other cryptocurrencies, i.e. fines up to ten years in prison for general use of crypto in the country.
In its report to India’s Finance Ministry, the panel observed that there was a serious concern with the “mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these.” They complained, “All these cryptocurrencies have been created by non-sovereigns.”
“Therefore, the Committee is of clear view that the private cryptocurrencies should not be allowed. These cryptocurrencies cannot serve the purpose of a currency. The private cryptocurrencies are inconsistent with the essential functions of money/currency, hence private cryptocurrencies cannot replace fiat currencies. The Committee recommends that all private cryptocurrencies, except any cryptocurrency issued by the state, be banned in India. The Committee endorses the stand taken by the RBI to eliminate the interface of institutions regulated by the RBI from cryptocurrencies.”
Contradictorily, the panel foresees an RBI created a cryptocurrency as a boon for the country and that regulators should consider creating a sovereign cryptocurrency. They added:
“The Committee recommends that the RBI examine the utility of using DLT based systems for enabling faster and more secure payment infrastructure, especially for cross-border payments. The Committee recommends that blockchain based systems may be considered by MEITY for building a low-cost KYC system that reduces the need for duplication of KYC requirements for individuals.”
The committee further notes that there is value in the use of distributed ledgers in land deeds that could be “beneficial for removing errors and frauds inland markets if the technology is implemented for maintaining land records.”
Though the clear meaning of this in practice is unclear, these recommendations are in line with a conservative view of DLT and cryptocurrency use. For instance, Land deeds are a popular distributed use case and Medici Ventures and Patrick Byrne have been exploring the creation of these registries as a solution to civil unrest.
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