A panel reporting to India’s Finance Ministry suggested the country’s regulators have an “open mind” about a governmental cryptocurrency and, at the same time, proposed fines and up to ten years in prison for general use of crypto in the country.
The panel, created by the Ministry of Electronics and Information Technology, the Securities and Exchange Board of India, and the Reserve Bank of India, found that there was serious concern with the “mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these,” according to the report.
“All these cryptocurrencies have been created by non-sovereigns,” they complained.
“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.”
On the other hand, they saw a cryptocurrency created by the RBI could be a boon for the country and that regulators should consider creating a sovereign cryptocurrency.
“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,” they wrote. “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 also saw value in the use of distributed ledgers in land deeds that could be “beneficial for removing errors and frauds in land markets if the technology is implemented for maintaining land records.”
What this means in practice is unclear although these recommendations are in line with a conservative view of DLT and cryptocurrency use. Land deeds, for example, 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.
That said, 10 years in jail for stacking some sats sounds like a decidedly unlikely – and unfair – outcome of the committees’ assessment. Perhaps Indian authorities will soon discover that crypto, like the internet, tends to route around damage.