Bitcoin stack with a national flag in the background

Cryptocurrencies Could Destabilize The Rupee – Indian Govt Crypto Committee

News, Regulation | February 5, 2019 By:

The Indian government committee tasked with drafting regulation for cryptocurrencies is reportedly worried about the impact cryptoassets will have on the Indian rupee if they are accepted as payments, Quartz India reported.

The committee, set up in November 2017 and headed by secretary in the department of economic affairs Subhash Chandra Garg, is believed to be unsure of the repercussions cryptocurrencies will have on the rupee if they are allowed to be used in payments.

“If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilising the fiat currency is a major concern for Garg’s panel,” said one of the representatives from the cryptocurrency ecosystem who recently met the ministers, requesting anonymity. “The overall impact on the financial ecosystem that it is likely to have is still unclear and it has been a challenge to convince them on this particular point.”

In October 2018, the Indian Supreme Court asked the government to officially clarify its position on cryptocurrencies. In response, the Indian government, the RBI and the finance ministry informed the court that the panel was going to submit a draft report to its own members on the ecosystem. However, the finance ministry said that “it is difficult to state a specific timeline to come up with clear recommendations” and that Garg’s panel is “pursuing the matter with due caution.”

“At this point it may be a bit premature to worry about this as right now even globally only a handful of payments are made using virtual currencies and that will be the case till blockchain reaches the scale that say Mastercard or Visa have,” said Rahul Raj, founder of Indian cryptocurrency exchange Koinex. “Therefore, there is a considerable time before that concern even comes up.”

While the government is not comfortable with cryptocurrencies, it believes that blockchain will bring seismic changes to India’s society. In February 2018, India’s Prime Minister Narendra Modi said that disruptive technologies, such as blockchain, are breaking down geographical limits and roadblocks, and will help regulators create a seamlessly integrated world.