The Government gave another red signal to the bitcoiners.
Last week high-ranked officials said that the new crypto law would ban possession or usage of all private cryptocurrencies.
According to the politicians the Blockchain technology would be promoted in the country (India is on its way to create CBDC – digital rupee) but the “private cryptocurrencies” like Bitcoin and Ethereum would be banned. This is not the first ban of crypto in India. The previous bill from 2019 went as far as proposing jail terms for offenders. Now the officials say strict penalties are expected instead.
However, the Finance Minister Nirmala Sitharaman said at a separate event that there will be a “window” for experiments with Bitcoin and Blockchain.
“We will allow a certain amount of a window for people to experiment on blockchain and Bitcoin,” said Sitharaman. Then she added that the bill on crypto is almost ready and will pass soon.
The specific part of the story is that in India the Reserve Bank of India – the country’s central bank is part of the Finance Ministry. In many countries these two institutions are separated in order to prevent controlling one another. Despite being placed under the hat of the Finance Ministry, the RBI holds complete autonomy over monetary policies and issuance of the Rupee. On the other side the Finance Ministry handles macroeconomic policies, public financing, inflation and the stock market.
The two institutions are not getting along well – they have different views in how the money must be deployed. In 2018 the RBI banned the cryptocurrencies but in May 2020 the Supreme Court overturned the ban. Now the bank wants to ban all of the private crypto and to start developing its own digital currency. All agree that there is “financial instability” of the Indian economic system.