Although many government officials are in favor of a blanket crypto ban, the FInance Minister urges caution.
In a recent conversation with Indian daily Hindustan Times, Indian Finance Minister Nirmala Sitharaman urges c aution and consideration in the impending crypto ban. The previous defence minister said, mutatis mutandis, that such a futuristic thing as cryptocurrencies cannot simply be ruled out. However, at the same time, she stressed that her country India is also not ready to follow in the footsteps of El Salvador.
This conversation is prompted by the recurring discourse in India since 2017 on the legal status of cryptocurrencies. The Reserve Bank of India, India’s central bank, has always held the view that a blanket ban on digital private coins across the country is necessary. As a punishment in case of non-compliance, a draft by the central bank even provides for jail terms. Now, an inter-ministerial committee set up specifically to clarify the crypto issue is joining this demand.
The finance ministry seems to disagree
Finance Minister Sitharaman stresses that the task of balancing the various positions is now at hand. The aforementioned bill first needs the approval of the federal cabinet before it is put to a vote in parliament. So far, however, it is not public whether the content of the bill actually includes a ban or merely regulation of cryptocurrencies.
Whatever may be in this bill, Finance Minister Sitharaman is of the opinion that there is a need to ensure that forward-looking things are not excluded per se.
India: no cryptocurrencies, but a CBDC?
Further speaking to Hindustan Times, the Finance Minister is asked if India should have its own central bank digital currency (CBDC). To this, Sitharaman evasively replies that India has some strengths and opportunities in the technology space. Still, she says, something needs to be developed that suits the country’s own system – a ban sounds different. Instead, she suggests weighing the possibilities and risks of such a move:
We need to develop something that fits our system. India has the strength of technologies: FinTechs offer us control over the tools you can play with, our economy is full of opportunities. That’s why we have to be careful, but we also have to think it through.
The Reserve Bank of India governor announced in August the possible launch of a CBDC test project in December, but even then emphasized the cautious approach on the part of the central bank.
Really the crypto fog in India also seems clearer from the recent interview not to become. Already the former and incumbent governors of the Reserve Bank of India have voiced conflicting statements on the legal status of cryptocurrencies and the possible adaptation in recent months. Regulatory clarity is not in sight.