Government

India’s government could be working on its own cryptocurrency

c:stock.com/[RapidEye]

The Indian government is rumoured to be exploring the creation of its own digital currency, despite having taken a hardline stance on cryptocurrency-related activity in recent months.

As reported by Quartz India, senior government officials from the country’s finance ministry met at a private panel, and quotes obtained from the meeting suggest a cryptocurrency could be on the agenda.

“We are evaluating the government-backed cryptocurrency and crypto-token,” said one of the panel members. “And we are looking to develop and encourage our own research and development of blockchain technology.”

If there’s substance to those albeit general morsels, it’s a turn-up for the books for India which has taken steps to stymie the growth of cryptocurrencies with newly-introduced laws and regulations.

In April, the Reserve Bank of India (RBI) prohibited banks from offering services to cryptocurrency exchanges, causing many to close or leave the country, and issued regular statements to the public regarding the risks of digital currencies.

Those exchanges saw their user bases dwindle as a result, with some investors worried that the RBI would close their accounts for using cryptocurrency.

Making this anti-crypto stance loud and clear, however, the central bank at the same time said it had formed an interdepartmental group to study the feasibility of an RBI-backed digital currency “in addition to the paper currency we have”.

It’s thought these latest comments from the finance ministry are a continuation of those conversations, suggesting the concept is at least being given some serious thought.

While this is a positive in that cryptocurrencies would become more central and harder to ignore in India, others suggest it would undermine the whole principal.

Speaking to Quartz, a member of the crypto community privy to the meeting, said: “If a virtual currency is going to be backed by the government then it goes against the whole grain of such coins.

“These are essentially decentralised ledgers, and if the government or the RBI is trying to control it, then it loses its meaning.”

It might be worse that that, though. Parallel to its discussions around a government-backed digital currency are threats that it will ban any other coins in existence in the country.

“The panel is also discussing amendment of the Currency Act to make possession of any cryptocurrency, not approved by the government, a punishable offence,” said the same source.

India’s wouldn’t be the first government to launch its own digital coin. Venezuela, the world’s second-largest oil producer, this year launched the government-owned Petro, equivalent to the price of one barrel of oil.

The RBI has reportedly planned to name its digital currency after the Hindu goddess of wealth, Lakshmi (pictured above).

 

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