A report by the Mumbai Mirror read that the governor of the Reserve Bank of India, Shaktikanta Das, stated that the institution for entities regulated by RBI views no possibility of allowing private digital currencies to operate in the country.
Instead, RBI is at the early stages of developing a central bank-issued digital currency but is behind schedule due to technological hitches.
Following the statement by the governor RBI, it’s now clear that India’s crackdown on all crypto to enable the smooth launch of its centralized digital currency will be backed by the central bank and issued as a sovereign right of the country.
In early 2018, India’s central bank, the Reserve Bank of India (RBI) announced that it had placed a ban on the sale or purchase of cryptocurrency for entities regulated by RBI terming cryptocurrency as non-sovereign.
In July this year, Indian cryptocurrency watch panel proposed fines and jail time for cryptocurrency use with up to ten years in prison for general crypto use in the country.
This announcement also confirms reports that India will be unwelcoming to Facebook’s innovative cryptocurrency-Libra.
In his statement, Das commented that central banks and governments throughout the world are against the use of private digital currency because their use will be against sovereign rights:
“The world over, central banks and the governments are against private digital currency because currency issuance is a sovereign function, and it has to be done by the sovereign.”
Das also confirmed the possibility of India launching a central bank-issued digital currency. However, he stated that it was too early to speak on the issue since the technology to introduce the central currency was not yet in place.
India is not the only country that has outlawed the use of private digital currencies. The European Union has barred the use of Libra and other private digital currencies due to the financial risk that they pose.
The EU is also looking at ways of regulating crypto-assets and digital coins in the coming years. China has also announced that it’s going to launch its national digital currency mid-next year.
In so many ways, India’s hostile reception towards cryptocurrency and blockchain technology had been largely been compared to China’s unfavourable stand on the same. The ban of cryptocurrency in India in April 2018 played a significant role in the dip of Bitcoin prices globally.
Unlike India however, China seemed to have softened its stance on and its pushing for blockchain adoption after realizing its benefits. The president of China Xi Jinping is urging companies and government institutes to start embracing blockchain technology. Nonetheless, a report by Economic Times indicates that India is looking at the adoption of blockchain technology at a national level. This report is still not clear and it seems the country will take more time before adopting the blockchain technology and also allowing the use of private digital currencies such as Libra.