India has had an interesting evolution with regard to its relationship with cryptocurrency and blockchain. In the past, the country’s hostile laws towards cryptocurrency led to many crypto firms were forced to shut down their operations or move abroad due to a ban on banking services being provided for crypto-related firms. This was a classic example of how a country’s regulation could cripple an entire industry practically overnight and ever since then, the crypto industry within India has been trying to find its footing.
All this might be about to change as the draft of India’s blockchain and crypto strategy reveals possible plans for a national digital currency, a digital version of the Indian and a national blockchain.
This draft document, though issued on December 30, 2019, has been formally published in media across India by the National Institute for Smart Governance (NISG), which is a non-profit body that was incorporated by the Indian government.
Within the document, a strong suggestion and argument are put forward about the digital Indian rupee which will be issued by the Reserve Bank of India and the paper states that this would be a highly beneficial development.
“As an alternative to Public Blockchains that operate with native cryptocurrency, like Ethereum, it is strongly recommended that Government of India along with RBI come out with a Central Bank Digital INR (CBDR) administered over a Public Permissioned Blockchain that processes transactions through a Turing Complete Virtual Machine allowing decentralized applications to run on its platform,” the document says.
The document also goes on to talk on the current regulatory environment within India and states that the government should have a light touch approach as the current laws in place are very restrictive and it does not take into account the fact that blockchain and crypto are emerging industries. Proper regulatory clarity was also called for in order to encourage the growth of the industry.
“Public statements, whether through the press or formal speeches, are helpful but are not official statements of application by the agency. If an agency intends to enforce its laws in new and innovative ways, it must first notify industry stakeholders of its intent to do so and the way in which existing law applies,” the document says.