The Indian government has become infamous in the cryptocurrency world due to its hardcore “against” stance on the technology. However, reports have emerged that the government is considering launching crypto-tokens in the country.
These are different from cryptocurrencies, as they are representations of money and not currencies themselves. The tokens will be utilized for financial transactions, with the ban still “likely to continue”.
However, a committee has been formed, under the Department of Economic Affairs, to study how these cryptocurrencies and digital assets can be regulated and to form a roadmap for the future of digital assets in the subcontinent.
The draft of the regulations will be tabled before the Indian Parliament when they are “ready and legally vetted”, stated sources to Indian news reporting platform DNA.
The head of the committee and DEA secretary Subhash Chandra Garg stated:
“The committee is studying the possibility of using cryptocurrencies or the crypto technology (distributed ledger technology) for financial transactions and also what kind of regulations are needed for that. [While] the currency is totally banned, the committee is discussing its other usage and how it can be mainstreamed in India,”
Garg seems to be of the opinion that cryptocurrencies are a “Ponzi kind of scheme”, stating that the Reserve Bank of India has released advisories for this specific reason. This is also the reason the regulator has debarred banks from dealing with any aspect of the technology, with Garg referring to this move as “regulations”.
However, cryptocurrencies might see new life as crypto tokens. A senior official in the Indian government stated to DNA:
“One will need to pay physical money to buy a token which could be stored as a code in any basic mobile feature phone. It can even be used for remittances. So, it is easy to implement from technology as well as a regulatory point of view.”
The implementation of these tokens might also be as a test of sorts to see whether crypto-technology can be utilized in the country. Many speculate that the reasons cryptocurrencies haven’t been legalized completely yet are because it interferes with the supply of money in the country. The President of Digital Lenders’ Association of India, Alok Mittal, stated:
“Crypto token operates in a closed system and doesn’t impact the country’s monetary policy unlike cryptocurrency, which interferes with the money supply situation.”
Garg also spoke about the difficulties in regulating emerging technologies, stating:
“”This is a difficult subject, involving technology which is changing every now and then. That’s why it is taking some time.”