By CCN Markets: Facebook’s cryptocurrency Libra is expected to change the way payments are made across the globe when it launches next year, but there’s one market that the social media giant might be giving a miss – India.
The Economic Times, India’s biggest business daily, reports that Libra will not be available in India, citing people with direct knowledge of the matter:
“The social network’s digital wallet, Calibra, won’t be available in markets where “cryptocurrencies are banned or Facebook is restricted from operating in,” the person said. “Facebook has not filed any application with RBI (Reserve Bank of India) for its cryptocurrency in India,” said a second person aware of the matter. RBI did not respond to queries from ET.”
This, despite a previous report that Facebook specifically picked India as the launch market for its cryptocurrency.
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India will be a tricky nut to crack for Facebook’s Libra
The Indian government and regulators have traditionally carried a hostile view toward cryptocurrencies, implementing a slew of measures to discourage adoption of the likes of bitcoin.
India has taken a variety of steps to stifle the growth of cryptocurrencies, fearing that bitcoin and the likes are instruments for laundering money, duping naïve investors, evading tax, and financing terrorism.
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The government has already instructed banks to stop dealings with cryptocurrency exchanges, while the income tax department has singled out people involved in crypto transactions.
What’s more, the Indian government might put you in jail for a decade if you’re found in possession of bitcoin or other cryptos, if the draft of the country’s Banning of Cryptocurrency and Regulation of Official Digital Currency Bill is to be believed.
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All of this makes it difficult for Facebook’s Libra to crack the cryptocurrency market in India. This would be a big blow for the social media giant as India is its largest market, accounting for more than 10% of its user base.
Statista estimates that Facebook has 260 million users in India out of a global user base of 2.38 billion. So missing out on this market could deal Libra a big blow as Facebook will be missing out on a huge chunk of the population that has been rapidly transitioning toward digital modes of payment.
India’s convoluted laws won’t be easy to bypass
Facebook’s crypto Libra is raising a lot of eyebrows in countries such as the US and France, where regulators are concerned about how the social media giant will keep user data safe and private. But it is an entirely different ball game in India where Facebook could face an outright ban.
According to Salman Waris, who is the managing partner at specialist technology law firm TechLegis Advocates & Solicitors, Facebook could fall on the wrong side of the Reserve Bank’s norms and India’s Income Tax Act. He told ET:
“Under Section 79 of the Indian IT Act, Facebook is obligated to take ‘all due care’ to ensure its network or platform is not used for illegal activities like dealing in cryptocurrencies in India. Section 79 would apply to Facebook even though it is based out of India. Section 75 of the IT Act also gives extraterritorial jurisdiction to the law.”
Even if Facebook’s Libra is a closed system that’s used for making peer-to-peer payments on its platforms such as Messenger and WhatsApp, it could invite the wrath of the Indian government and regulators.
The establishment has tried to kill cryptocurrencies in India with a lot of zeal. So it won’t take long for the government to believe that bad actors are using Facebook Libra to launder money or finance terrorism, taking a massive market opportunity away from the social media company.