It was in mid 2008 that bitcoin first came into our lives. Ever since its debut, a lot had been said about the digital currency that can be traded for services or goods with sellers who accept bitcoins as payment. The crypto-currency, which isn’t supported by a country’s government or central bank, has been banned in a handful of countries with the government’s of several other countries including India constantly cautioning its netizens against the risk involved with the usage of this digital currency. Even though bitcoin is considered as one of the most volatile currencies in the world, it still continues to do more than 100,000 transactions per day. According to experts, this figure is only going to ballon up in the near future with the massive innovation being fed into the field, courtesy bitcoin’s underlying technology, the blockchain
Off late, there have been several reports that have stated that the Indian government has decided to launch a march against the usage of digital currency and is even contemplating bitcoins illegal in the Indian subcontinent. IndianWeb2 would like to put all those rumours to rest and address the panic situation created due to such false reports. Well, the rumours started to fly when the Indian government recently announced that it is in the midst of setting up of a committee to examine the existing framework on digital currencies in the country over the concerns of the adverse impact that virtual currencies such as bitcoin can have on the consumer. According to sources, the government is only looking at ways to regulate the fast-growing segment so as to curb money laundering. It definitely has no plans of ordering a blanket ban on digital currencies in the country anytime soon.
A similar panic situation was created last month when a member of parliament (MP) raised the issue that bitcoin is a ponzi scheme. But back then, leading Indian bitcoin startup Zebpay had issued an official statement falsifying the reports that suggested that bitcoin has been declared illegal by the Indian government. The statement even explained in detail about how bitcoin is not a ponzi scheme (Read Here).
The Digital Asset and Blockchain Foundation of India (DABFI), which is a self-regulatory body recently setup by some of India’s most popular bitcoin startups like Zebpay, Unocoin, Coinsecure and SearchTrade considers this as the right time to showcase the Indian government the vast benefits that the digital currency can bring to the Indian population and economy. The committee has urged the government to provide them a chance and hear them out before rolling out any regulations on the usage of digital currencies in the country.
According to several economists and tech experts, the government’s interest in digital currencies grew when it came to realise that several black money hoarders had resorted to virtual currencies and bitcoins in order to launder their cash after the government announced the surprise demonetisation drive in November. The finance ministry has asked the committee to brainstorm and suggest ways to deal with virtual currencies including issues relating to consumer protection and money laundering.
According to the release issued by the government, “The Committee will (i) take stock of the present status of Virtual Currencies both in India and globally; (ii) examine the existing global regulatory and legal structures governing Virtual Currencies; (iii) suggest measures for dealing with such Virtual Currencies including issues relating to consumer protection, money laundering, etc; and (iv) examine any other matter related to Virtual Currencies which may be relevant.”
As of now, usage of virtual currencies such as bitcoins is not authorised by the Reserve Bank of India (RBI) and could result in breach of anti-money laundering provisions. The RBI has time and again issued circulars cautioning holders, traders and users of virtual currencies in the country about the a potential legal, security and financial risks that might arise due to these currencies.
But, the DABFI is adamant at proving to the government that there are more positives involved here than the negatives. According to it, if given a chance, they can prove to the government and the committee it is setting up about how bitcoin leads to financial inclusion, cheaper cross-border remittance, and full trace and track on the movement of value on the blockchain network. DABFI is quite confident that if given a fair chance in the country, the digital currency has the potential of turning India into a financial hub.
But, Minister of State for Finance Arjun Ram Meghwal has a different viewpoint to offer. According to him, the absence of counter parties in usage of virtual currencies, including bitcoins, for illicit and illegal activities in anonymous/pseudonymous systems could potentially subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws.
The government committee has been asked by the finance ministry to submit its report within three months from now. So, the question whether the technology is able to make inroads in the Indian subcontinent is something that could be clearly answered only then. For now, the coast is clear for digital currencies including bitcoins in India, and according to several Indian bitcoin startups, it will remain so in the years to come as well.