India’s former Finance Secretary Subhash Chandra Garg has shared his views on the future of cryptocurrency, both in India and worldwide. He headed the committee responsible for drafting the infamous bill to ban cryptocurrencies, which the crypto community calls flawed in many regards.
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How Garg Sees the Future of Crypto
Subhash Chandra Garg headed the interministerial committee (IMC) tasked with studying all aspects of cryptocurrencies in India and providing recommendations. His committee’s report and draft bill entitled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” were made public in July. Soon after they were published, Garg was reassigned by Prime Minister Narendra Modi to the Power Ministry, from which he has since resigned.
The former Secretary of the Department of Economic Affairs shared his thoughts regarding cryptocurrencies in a blog post on Thursday. Entitled “Currency Will Become Digital; Crypto-Currencies Will Not Survive,” his post details problems he sees with cryptocurrencies. Garg wrote:
I am convinced that private crypto-currencies would have a very short future … If today’s valuation is anywhere close to $200 billion, the crypto-currency magic must have made some billionaires, obviously at the cost of lot of people who have purchased these essentially worthless codes.
He claims that there are three basic problems with “private cryptocurrencies,” a term he uses to include cryptocurrencies with no country backing them, such as bitcoin. The first is whether they are considered a currency or a commodity. In his opinion, they are “not a commodity with any intrinsic or commonly acceptable value” and have “no attributes of currency.”
The second problem concerns how to “maintain the value of a freely supply crypto-currency,” which he believes that “private entrepreneurs do not have any ability to maintain the value of [a] currency.” The third problem he sees is whether a currency can be issued by a private entity. In his view, if it can be issued by anyone, “no such crypto-currency will have any buyer or user.” In addition, he wrote that “Almost all private crypto-entrepreneurs are, however, motivated by the desire to make personal fortune by creating an ‘asset class’, which spirals into higher valuations, in some cases, based on speculative demand.”
Draft Crypto Bill Is ‘Flawed’
Garg’s blog post echoes the recommendations in the IMC report. However, the Indian crypto community strongly believes that they are flawed and has been actively campaigning to convince the government to that effect. Sathvik Vishwanath, CEO of local crypto exchange Unocoin, previously shared with news.Bitcoin.com:
In the draft bill, there are many major flaws. They have a wrong understanding of the technology and usage of crypto assets.
While the government can pass a law to ban cryptocurrency, “they won’t be able to control the crypto assets and transfer activity because it just happens over the internet on which government will not have direct control of,” Vishwanath added. He also emphasized that the crypto industry was not consulted prior to the drafting of this bill.
The Indian crypto community has also been running a social media campaign called “India Wants Crypto,” spearheaded by Nischal Shetty, CEO of local crypto exchange Wazirx, calling for positive crypto regulations. The campaign has entered its 430th day.
Banking Ban, Not Crypto Ban
The former finance secretary also observed that “There has been some use of crypto-currencies in payments, including international transfers, but it is not gaining any traction as there is no fixed/stable value, which is the most essential condition for any currency to be a currency.” He continued to say that the Reserve Bank of India (RBI) has prohibited the use of bitcoin for payments and the use of India’s payment system for trading or dealing in cryptocurrencies.
The central bank issued a circular in April 2018 prohibiting regulated financial institutions from providing services to crypto businesses including exchanges, forcing some of them out of business. The RBI ban has been challenged in the supreme court which is set to resume hearing the case on Jan. 14.
While there is a banking restriction, cryptocurrency is not banned in India. The Indian government has clarified several times that crypto is not prohibited. Shri Anurag Singh Thakur, Minister of State in the Ministry of Finance, told Rajya Sabha, India’s upper house of parliament, in July 2019 that the government had not prohibited cryptocurrency in India. The following month, he told Rajya Sabha that there was no data to corroborate that cryptocurrency was primarily used for illegal activities.
In an interview with news.Bitcoin.com last week, Shetty said he believes:
The Indian government will not rush into a bill without understanding the technology and discussing it with the crypto industry. This is the major reason why the proposed draft bill has not been considered.
What do you think of Garg’s views on the future of crypto? What do you think India will do about crypto regulation? Let us know in the comments section below.
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