A committee set up by the government of India to check into the viability of crypto in the country, and appropriate legal framework notes that its major concern is about the impact of cryptocurrencies on the stability of the nation’s national currency, the Rupee.
Governments Borders About Its National Currency As Cryptocurrency Continues To Thrive
The government committee which is headed by Indian Economic Affairs Secretary and former Executive Director at the World Bank, Subhash Chandra Garg revealed recently that if Bitcoin and other digital currencies are going to be allowed for payment, its tendency to end up destabilizing the fiat currency is a major concern for the committee.
The report noted that the impact of the use of crypto on fiat currency is still speculation as it is not known yet. However, it envisages that it would impact it negatively.
Notably, the speculative impact is being spurred by a report of the Bank of International Settlement, BIS. The report advised broad monitoring of digital currencies outside the centralized control, and it also warned that even central bank issued digital currencies could be a threat to financial stability.
Commenting on the perspective of the committee, Rahul Raj, founder of popular Indian Cryptocurrency Exchange, Koinex said that at the moment it seems a bit premature to start thinking about the impact of crypto use on monetary stability. This is because the scale of payments made with crypto is still quite limited and there is no need to worry about it until blockchain reaches the level of MasterCard and Visa.
Crypto Usage and Ban Concerns
The view expressed by the government committee of India on the impact of crypto on fiat currency was the major factor stated to have spurred the ban on the use of cryptocurrency in China. The Chinese government banned the use in an attempt to support the economy and the stability of its national currency.
The legal status of crypto usage in India continues to be a debate as the government has been nonsupportive of the use of cryptos. The government committee suggested a new legal framework for cryptos in December which saw the ban of crypto use in India. Later in the month, it was also suggested to be legalized by the same committee. The status of crypto is still not balanced as the Reserve Bank of India gave up on crypto to Rupee plan due to the unsatisfactory report of the study of stablecoin by an interdepartmental group.