The Governor of the Reserve Bank of India (RBI), the Indian Central Bank today voiced his concerns over the use of cryptocurrencies suggesting it might have a devastating impact on the economy of the country. Shaktikanta Das, the governor of RBI made these comments during an interview with a local media house said that India is very much in the race to launch its own digital currency quite similar to the Chinese Digital Yuan.
Das comments come at a time when the Indian government had already proposed a blanket ban on the use of private cryptocurrencies. The Indian crypto ecosystem has been marred into uncertainty ever since RBI’s banking ban in 2018, however, the supreme court intervention helped Indian crypto entrepreneurs to start afresh in 2020 after overruling the banking ban. The Indian crypto ecosystem was quick to show its potential within a year as nearly $13.9 billion flowed into the industry with nearly 7.5 million active traders.
Many Indian crypto entrepreneurs and crypto influencers across the globe have appealed to the Indian government to regulate crypto assets rather than banning them.
In 1999, India turbocharged its economy by opening up foreign exchange. Now it faces a similar choice: back to the License Raj with a crypto ban, or legalize a crypto boom? @nsitharaman @narendramodi https://t.co/LQuDqnX0Vk
— balajis.com (@balajis) February 17, 2021
Indian Government’s Passive Approach Towards Crypto Could Prove Fatal For Future
The Indian government’s stance against cryptocurrencies seems pre-mature as they are looking at it as a legal tender and believe it could hamper their financial sovereignty. A reason often put forward by countries in 2018 for banning crypto use, however, cryptocurrencies especially Bitcoin are more of an investment tool, and being decentralized it’s next to impossible to ban its use.
Many other nations including the likes of the United States, UK, and many other European nations are looking to launch their own digital currency, however, at the same time they have regulated crypto efficiently for trading and the likes of South Korea and Russia are even plan to tax the profit generated from crypto trading.
India is following the same mistake it did nearly 3 decades ago during the last dot com boom and as a result despite being the IT outsourcing capital of the world, most of the tech unicorns are located in the US. The ban could also force established businesses and exchanges to move overseas leading to brain drain problems.