Although many members of the government are in favor of a blanket crypto ban, the finance minister urges caution.
In a recent conversation with the Indian newspaper Hindustan Times Indian Finance Minister Nirmala Sitharaman urges caution and consideration with the impending crypto ban. The previous defense minister said that something as futuristic as cryptocurrencies could not simply be ruled out. At the same time, she emphasizes that her country, India, is also not ready to follow in El Salvador’s footsteps.
The reason for this conversation is the discourse that has been recurring in India since 2017 on the legal status of cryptocurrencies. The Indian Central Bank, Reserve Bank of India, has always been of the opinion that a blanket ban on digital, private coins across the country is necessary. As a punishment for non-compliance, a draft of the central bank even provides for prison terms. An inter-ministerial committee set up specifically to clarify the crypto question is now joining this demand.
The Treasury Department seems to disagree
Finance Minister Sitharaman emphasizes that the task now is to balance the individual positions. The above-mentioned draft first requires the approval of the Federal Cabinet before it is submitted to parliament for a vote. So far, however, it is not public whether the content of the law actually contains a ban or just a regulation of cryptocurrencies.
Whatever it is in this law, Treasury Secretary Sitharaman believes it is important to ensure that forward-looking things are not ruled out per se.
India: no cryptocurrencies, but a CBDC?
The finance minister will continue in conversation with Hindustan Times asked if India should have its own central bank digital currency (CBDC). Sitharaman evasively replies that India has some strengths and opportunities in the technology area. Nevertheless, something has to be developed that fits your own system – a ban sounds different. Instead, she suggests weighing the possibilities and risks of such an approach:
We have to develop something that fits our system. India has the power of technology: FinTechs give us control over the instruments you can play with, our economy is full of possibilities. So we have to be careful, but we also have to think it through.
The governor of the Reserve Bank of India announced in August the possible start of a CBDC test project in December, but even then emphasized the cautious approach on the part of the central bank.
The crypto fog in India does not seem to become any clearer even after the latest interview. Even the former and incumbent governors of the Reserve Bank of India have made contradicting statements about the legal situation of crypto currencies and the possible adaptation in the last few months. Regulatory clarity is not in sight.