There is no denying the impact of cryptocurrencies in the modern financial sector. However, the problems facing the industry such as security and lack of a proper regulatory framework has caused most governments to shun cryptocurrency in their jurisdictions. India is one of the countries that were fighting cryptocurrencies, but according to News BTC, India might be warming up to cryptocurrencies. The country is laying down the framework for a government-backed cryptocurrency.
India put together a board under the Finance Ministry in December 2017, and one of the sitting members in the board has confirmed the plans. At the time, the board was meant to recommend measures on how the government would direct cryptocurrencies. The board was mandated with investigating and it had to present its findings in July 2018. The official maintains that the board is in support of India developing its crypto coin. This is despite the fact that both the central bank and the government have tried to diminish the setup of cryptocurrency exchanges in the country.
Altcoins Remains Banned in India
However, it might be a while before we see India’s first cryptocurrency. A government official while commenting on the plans to create the cryptocurrency saying that it conflicted with the ideals that surround decentralized cryptocurrencies. In spite of this, the government still maintains its stand to ban cryptocurrencies even with their digital currency in circulation. Another official commenting on the issue said that anyone who would be found in possession of a different coin other than the government digital currency would be open to prosecution.
The reports of the government launching its altcoins came after the RBI intensified their efforts to prohibit the use of bitcoin in India. The agency issued an order to all local banks to cut lose all firms that incorporate cryptocurrencies into their business model, including all individual traders and cryptocurrency exchanges.
This order banning cryptocurrency entities from accessing banking services infuriated the stakeholders, and they have taken the central bank to court. However, the case is likely to drag on for a while, and there seems to be no imminent end to the tussle. Other players in the Indian cryptocurrency circles have tried to navigate the order, but they have not found a sustainable plan of doing business.
Both the government and the RBI consider digital currencies too risky, with the fear of money laundering, fraud, and supporting criminal activity taking center stage. The only option left for cryptocurrencies to exist in India is if it is controlled, and this is where the plan of having a government-backed cryptocurrency comes in.
The RBI has proposed to name the government-backed cryptocurrency after Lakshmi, the Hindu goddess of wealth and riches. However, this is not the first government-backed altcoin. Venezuela is a notable case where they have the Petro, an altcoin backed by the nation’s oil reserves. The board convened to look into cryptocurrencies is expected to table its findings in towards the end of the year, and India might be a step closer to launching their Lakshmi token.