India: IMC’s recommendation to ban private cryptos does injustice to the country’s unbanked, crypto-community

While India took a giant leap forward with the launch of its second moon mission, Chandrayaan-2, it also took a step back after an Inter-Ministerial Committee recommended a ban on “private cryptocurrencies.” The latest move is being seen by many as a massive blow to the many cryptocurrency ventures, investors and innovators in India.

“Blockchain, not Bitcoin”

The government’s approach towards cryptocurrencies is now being termed as regressive. Nischal Shetty, CEO of WazirX, pointed out that the “flawed” crypto-report inaccurately stated that every crypto is a “currency” and formulated the recommendations based on this flawed concept. In a series of tweets, the CEO expressed his disappointment at the clear lack of understanding of the technology by the country’s lawmakers. He tweeted,

“The report makes little sense when it promotes Blockchain technology but looks down upon Crypto. That’s like saying that they promote the Internet but websites are banned!! Public Blockchain cannot be built without Crypto. Unfortunately that understanding does not yet exist”

The panel had also recommended creating a government-backed “digital currency” in the country. Further, in a tweet, Secretary, Department of Economic Affairs, Ministry of Finance, Subhash Chandra Garg said,

“Committee is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services. It also opens up door for a possible official digital rupee. Private crypto currencies are of no real value. Rightly banned.”

While a few have supported the move, a majority of the reactions have been negative. There is a need to address the vulnerabilities in existing financial systems which are presently highly centralized in nature. India’s creation of Aadhaar and Jan Dhan accounts have all recorded cracks in their security. Technologies such as these can bring about solutions which are not only scalable, but also resistant to attacks. An outright ban cannot be a solution for a country which strives for decentralization.

India continues to be home to one of the world’s largest unbanked populations. According to a press release by the World Bank, India with $79 billion, is also one of the top recipients of remittances. The World Bank’s Remittance Prices Worldwide database also revealed that the global remittance cost remained exorbitantly high. Cross-border payments during emergencies, or any transfer of value for that matter, can be executed in seconds if the economy is led by cryptocurrencies.