The Indian government is looking to forward to explore another experiment with Currency after its demonetization exercise last year. Based on a report from Business Standard, the central government is exploring possible options to introduce its own Cryptocurrency similar to Bitcoin.
Sudharshan Sen – RBI’s executive director, told in a finance meeting held in Mumbai last week that RBI is not comfortable with the use of non-fiat Cryptocurrencies. Hence, a committee of government officials was considering the idea of RBI introducing its own Cryptocurrency since they can have complete control over it and implement proper regulations.
The financial experts are also exploring the benefits of RBI running its own blockchain for managing all the transactions done using digital currencies. The undisclosed sources also revealed that the government might name the newly introduced Cryptocurrency after the Hindu goddess of wealth and prosperity – ‘Lakshmi’.
The success of Bitcoin globally and its growing acceptance as a Cryptocurrency might have influenced this sudden decision by the RBI. Even in India, many investors have started trading bitcoin through bitcoin wallets like ZebPay, Unocoin and other digital currency exchanges. If the government implements this proposal, then there will be several amendments to the existing Currency Act and the new Cryptocurrency will fall under RBI’s financial domain.
Even other governments like Russia, Estonia and China are exploring the same idea of launching their own Cryptocurrencies. RBI is also aware of the benefits of Blockchain technology in financial domain, which is a distributed ledger that manages all the transactions in the Crypto world. State Bank of India, the country’s leading financial institution has been a forerunner in exploring Blockchain technology for sharing financial data among banks that can help in preventing frauds and bad loans. This SBI initiative named BankChain is done in partnership with technology giants like Microsoft, IBM and ten commercial banks including KPMG. Even the Dutch government has created their own digital currency to experiment its usage for various purposes like tax payments etc.
Bitcoin and other altcoins have suffered a bad fall recently due to the regulatory pressure from China which is one of the leading countries in Cryptocurrency trading. China has officially banned Initial Coin offerings and also ordered the shutdown of major digital currency exchanges. Even in the United States, SEC has given official warnings about the use of virtual currencies and ICOs since there were many financial scams surrounding it. Singapore and Australia are also considering the enforcement of regulations to control the trading of Crypto Currencies.
Since the transactions done through digital currencies are completely anonymous, there are possible risks of illicit activities like money laundering and terrorist financing. Bitcoins are also used by hackers for demanding ransom from the victims since it’s anonymous and they cannot be tracked. The hackers who spread ransomware like Petya, Wannacry and Lucky have demanded their ransom through bitcoins. To avoid all these possible threats, the Indian government is exploring the option of launching its own Cryptocurrency which it can have a better control over and monitor all transactions.