Private Cryptocurrencies: IMC or the Indian inter-ministerial committee has lately suggested a blanket ban on all privacy-centric Cryptocurrencies in the country. The report states with “serious concern” the “mushrooming of Cryptocurrencies,” warning that “numerous people in India investing in” digital assets that are “almost invariably issued abroad.” As such the case, the report concluded saying: “Cryptocurrencies have been created by non-sovereigns and are in this sense entirely private enterprises.”
The IMC declares that there is no underlying intrinsic value of these private Cryptocurrencies and all the attributes of the currency. The report has also expressed concerns on the price volatility of Cryptocurrencies mentioning that there is no fixed nominal value of these private Cryptocurrencies, i.e. neither of them act as any store of value nor they are a medium of exchange. As in this case, the draft law proposes that any direct or indirect use of the private Cryptocurrencies is punishable with imprisonment of between 1 and 10 years and that it could fine of up to Rs 25 crore (accounting to nearly $3.63 million). The IMC is chaired by India’s Secretary of Economic Affairs, Subhash Chandra Gargas, who is also joined by the chairman of the Securities and Exchange Board of India (SEBI), Ajay Tyagi, and Sumant Prashant of the National Institute of Public Finance and Policy, among others.
The co-founder of India Cryptocurrency exchange Unocoin, Sathvik Vishwanath, has warned that the recommended cryptocurrency prohibition to be “drastic,” and warned that the policy would be to the detriment of Indian’s technology sector. He stated that if the government decides to take such a drastic step then India will stand to lose out significantly on the technology front. On the other hand, Nischal Shetty, the chief executive officer of Indian exchange, WazirX, has expressed hope that the government would not implement the proposed ban, stating that banning private Cryptocurrencies is a regressive step and no country or government should ban a new technology such as this.
In spite of the hostile stance taken with regards to the private Cryptocurrencies, the report advocates that the Reserve Bank of India (RBI) issue a central bank-backed virtual currency, recommending that a hypothetical digital rupee and other virtual currencies backed by sovereign states be exempt from the proposed private Cryptocurrency ban. Speaking of the potential benefits brought to the people by the issuance of a digital rupee, the report states that it can be used by banks and other financial firms for processes such as fraud detection and claims management in insurance, loan-issuance tracking, collateral management, and reconciliation systems in the securities market. Nonetheless, the report also praises the decentralized ledger technology (DLT) generally, describing such as an important and innovative technology, which will play a major role in ushering in the digital age. Nevertheless, the IMC advocates the development of a comprehensive legislative apparatus to regulate the use and promotion of DLT in India. Finally, the IMC also recommends that the government prohibit the institutions regulated by the RBI from interfacing with the private Cryptocurrencies.
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