The peasants have risen in India shouting plutocracy while a new Biden administration has many wondering which way India will go.
In this context, we have re-surfacing reports of long standing rumors that the Indian government may go as far as criminalize the act of possessing bitcoin itself.
Maybe not that far, says another report. “Sources” suggest they might follow China, which would mean ban crypto exchanges but not Over the Counter (OTC) peer to peer trading, not possession itself.
A minister went on the record to say that it may be just regulation, with the Minister of State for Finance Anurag Singh Thakur stating:
“The government does not consider cryptocurrencies legal tender or coins and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
The latest report is that no decision has been made. A committee was set up and came up with two opposing conclusions, one report said cryptos should be embraced while the other said they should be banned completely.
Then we have ‘sources’ suggesting the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 ‘might‘ be pushed through an Ordinance, that being the same as an executive order in the US.
If it is pushed through an ordinance, then India’s Prime Minister Narendra Damodardas Modi would take full responsibility himself for this far reaching decision.
It may also be open to a legal challenge on the grounds of proportionality which the Indian government may lose again, but this time to the embarrassment of Modi himself.
So they may have no choice but to go through parliament. However doing so at any time when India’s reputation is at stake, including its standing as a tolerant democracy that is open to innovation, would be quite challenging. Doing so while farmers are on the streets, may risk a far bigger debate, including just who is Modi’s government serving?
Certainly not the people if they deny them the choice to hold digital gold, especially when India’s inflation is down to 4%. Thus there would be no argument of substance on monetary policy grounds because cryptos in India are still far too small and generally are not used for payment but for investment, like in gold or in the stock market.
Such decision instead would lower economic dynamism because a fast growing and highly innovative space would be oppressed without sound grounds or arguments.
Quite a few would also notice that India following China’s approach on bitcoin instead of the west would be a peculiar choice especially when there’s speculation regarding their commitment to the Quad.
Modi and his advisors therefore need to very carefully consider this most drastic act, not least because there clearly appears to be a political battle going on within the Indian government, hence we’re hearing all these different reports from criminal possession to regulation.
The latter is the approach of every free democracy, and therefore the Indian government would need to clearly explain to its people why they would follow the approach of an authoritarian government which they were fighting until recently in the mountains.
Not that they can successfully ban bitcoin. As the recent arrest of some Chinese citizens shows, bitcoin has a way of getting around censorship.
All they would do is isolate India from potential legitimate investors who may well put it in the same box as authoritarian China due to taking the same approach on economic freedoms.
Something that would be ironic because the government that calls these farmers as anti-India may be seen by some as itself being anti-India if it takes the dictatorial step of denying the people the right to hold digital gold.