As India is cracked down on bitcoin the special panel constituted by India’s finance ministry is now considering to launch its own cryptocurrency and crypto-token to avoid people using Bitcoin. This already been hinted in April but it appears that India government strives to make it a reality as fast as possible.
“We are evaluating the government-backed cryptocurrency and crypto-token,” said a senior government official privy to the discussions of the panel. “And we are looking to develop and encourage our own research and development of blockchain technology,” he added, referring to the digital infrastructure on which cryptocurrencies are based.
Choking the ecosystem
According to an executive, requesting anonymity, “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 decentralized ledgers, and if the government or the RBI is trying to control it, then it loses its meaning”.
RBI has already come down heavily on bitcoin and its ilk almost choking the ecosystem. Since July, the central bank has barred banks from maintaining any business relationship with cryptocurrency exchanges and traders, including maintaining savings bank accounts. Furthermore, Blockchain and AI to be tracked by the new Reserve Bank of India Unit also.
What’s worse is that the government may also kill or ban the existence of other digital currencies if a government-backed cryptocurrency is rolled out.
“The panel is also discussing amendment of the Currency Act to make possession of any cryptocurrency, not approved by the government, a punishable offense,” said the government official.
Like the RBI, even the government is not comfortable with virtual currencies. The government has also expressed concerns that these currencies may be used to launder money or dupe gullible investors. Therefore, it is seeking control.
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