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Bitcoin a ‘Major Concern’ for the Indian Government, if Used for Payments: Report

Last Updated March 4, 2021 2:53 PM
Alan Wass
Last Updated March 4, 2021 2:53 PM

India has long been a nation that has taken a hardline stance towards cryptocurrencies. The risks associated with digital currencies such as money laundering and terrorism funding have long fueled the Indian government’s approach to dealing with digital assets. A panel of high-ranking officials tasked with the job of drafting new cryptocurrency regulatory framework for India is now concerned with its impact on the Rupee.

In terms of cryptocurrency adoption in India, it seems the government is constantly looking for ways to downplay cryptocurrency’s role in the future of money instead of embracing it and integrating it into Indian society.

Will Crypto Payments in India Affect the Rupee?

The committee who are tasked with drafting cryptocurrency regulations in India is led by leading bureaucrat and economic affairs secretary in the ministry of finance Subhash Chandra Garg. The committee was initially set up in 2017 with Garg at the helm and is now closer than ever before to finally releasing its crypto regulatory framework.

Insiders are claiming  that the panel is extremely concerned that by allowing cryptocurrency payments, it could dramatically affect the price of their national currency, the rupee.

An anonymous representative of the nation’s crypto ecosystem reportedly met with the committee recently and has now aired the concerns of the ministers by saying:

If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilizing the fiat currency is a major concern for them (the Garg panel).

It must be very frustrating for the Indian cryptocurrency community to hear more reasons why officials are still dragging their feet in regards to the long-awaited crypto regulations.

The anonymous representative also said 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.

Problems in the Distant Future

Although it is true that allowing crypto payments in India will have some sort of impact on the national currency, some experts believe this is a problem for the future and can’t possibly unfold until greater crypto adoption happens.

The founder of the Indian cryptocurrency exchange Koinex , Rahul Raj, believes it will be a ‘considerable time before that concern even comes up’.

Raj thinks it’s too early to worry about the impact that crypto payments will have on the rupee when he said:

At this point, it may be a bit premature to worry about this as right now even globally only a handful of payments are made using virtual currencies and that will be the case till blockchain reaches the scale that say Mastercard or Visa have.

Both the Reserve Bank of India (RBI) and Garg’s panel have considered creating their own cryptocurrencies. And although the government is not really open to virtual currencies of any kind, they do want to explore blockchain technology.

There are lots of mixed signals in terms of cryptocurrency integration in India. The panel and the government were due to meet in January to discuss the issue more, but there is still no official or unofficial date at the moment to announce the launch of India’s new cryptocurrency regulatory framework.