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India May Issue Its Own Bitcoin-like Cryptocurrency As Legal Tender

Courtesy of ZeroHedge. View original post here.

Less than a year after India launched a shocking "war on cash" when on November 8, 2016 it unveiled a demonitization campaign in an effort to wipe out huge amounts of so-called 'black money' and streamline its largely cash-based economy, which however was called a colossal failure which cost innocent lives and ruined the economy" by Rahul Gandhi earlier this month after it was revealed that 99% of the high denomination banknotes cancelled last year were in fact deposited or exchanged for new currency, even as India's GDP tumbled to 2 year lows…

… on Saturday, the Business Standard reported that while working on creating a legal framework for bitcoin and other digital currencies, the Indian government is considering launching its own bitcoin-like cryptocurrency.

Preempting a report by the BIS released on Sunday, and which recommended that central banks should seriously consider launching cryptocurrencies of their own, the Indian press reports that the Indian government is considering “a proposal to introduce its cryptocurrency similar to bitcoin,” and which will be issued by the Reserve Bank of India (RBI). This state-run cryptocurrency will be called “Lakshmi,” the name of the Hindu goddess of wealth, fortune, and prosperity.

The proposal was reportedly "discussed by a committee of government officials, and the panel found the idea of setting up and running blockchain for financial services useful."

The report comes just days after RBI Executive Director Sudarshan Sen talked about the central bank’s discomfort with Bitcoin at the India Fintech Day conference. He hinted at the time that the government may be introducing its own fiat cryptocurrency which will be issued by the RBI.

“Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely,” he said. Echoing China's own displeasure with the soaring popularity of cryptocurrencies, the RBI executive stressed that the central bank is not comfortable with non-fiat cryptocurrencies such as bitcoin.

Despite the growing resentment toward bitcoin, the Indian government has also been working on creating a legal framework for bitcoin and other digital currencies. Last week, Money Control reported that “the government is going to prepare a framework for bitcoin soon.”  According to bitcoin.com, In April, the same government set up a committee to investigate bitcoin. Last month, Money Control also reported that the committee has submitted its report to the government. It recommended “strict monitoring” of digital currencies, the news outlet detailed, adding that “there is no possibility of immediate restriction,” but the government is also not in favor of promoting them.

The committee has additionally recommended a task force be created comprising of officers from the RBI, the Securities and Exchange Board of India (SEBI), the Income Tax Department, the Central Board of Excise and Customs (CBEC) and the Financial Intelligence Unit. The latter would then monitor the abuse of digital currencies, the news outlet noted.

So with China having already banned exchange-based trading of bitcoin, if not bitcoin itself just yet, and with India seemingly on pace to do the same as it pushes for its own, regulated and central bank-mandated cryptocurrency, the question on everyone mind is will this global crackdown against bitcoin and its peers boost their already near-record high popularity and price, or will it force holders to flee, wary of getting burned further by a wave of governments who have turned increasingly hostile to the ad-hoc cryptocurrencies which are not controlled by the central banks themselves, something Eric Peters hinted at earlier today. If the answer is the latter, will that prompt monetary purists and seekers of central bank inert currencies to finally start buying gold once again?


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