An Indian governmental committee is reportedly concerned by the impact that crypto could have on the country’s fiat currency, if it is allowed to be used for payments.
The article refers to government panel led by Indian Economic Affairs Secretary and former Executive Director at the World Bank, Subhash Chandra Garg, which was reportedly set up in November 2017.
An anonymous source active in the crypto industry — and who reportedly recently met with the committee — is quoted by Quartz as saying:
“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 committee].”
According to the article, the source further explained that 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.”
The article suggests that such concerns have been spurred by a report released by the Bank of International Settlements (BIS) in March. As Cointelegraph reported at the time, the banking giant suggested authorities “continue their broad monitoring” of digital currencies outside centralized control. The BIS also warned that even central bank-issued digital currencies (CBDCs) could be a threat to financial stability.
Rahul Raj, founder of Indian cryptocurrency exchange Koinex, told Quartz that “at this point it may be a bit premature to worry about” crypto’s impact on monetary stability, since the scale of payments made with cryptos is quite limited. According to him, there’s no reason to worry about that until “blockchain reaches the scale that say Mastercard or Visa have.”
As Cointelegraph reported in December last year, the same panel had reportedly suggested a new legal framework within the Reserve Bank of India (RBI) that completely bans cryptocurrencies in the country.
Later that month, news broke that the governmental committee had reportedly suggested that cryptocurrencies should be legalized in the country. Moreover, in January, the RBI reportedly gave up its crypto-rupee plans, as the results of a study on stablecoins conducted by an interdepartmental group proved unsatisfactory.
The debate over crypto’s legality in India began in April 2018, when the RBI stated it would no longer provide services to persons or legal entities involved with crypto. In response to the ban, multiple crypto-related businesses filed a suit against the bank in the country’s Supreme Court, with the legal outcome still unclear.