A new draft of a national Indian block-chain strategy foresees the country introducing its own central bank digital currency, the digital rupee, and a national block-chain.
The National Institute for Smart Governance (NISG), a non-profit organisation affiliated with the Indian government, presented a draft national block chain strategy on 30 December 2019. However, the document was apparently only made public at a later date, as the Economic Times of India first reported on it today, 28 January.
Digital Rupee and National Blockchain
In the draft, the NISG proposes a “Central Bank Digital Rupee” (CBDR), which would be a digital currency operated on a government-owned block chain. The NISG “strongly recommends” that the Indian government and the country’s central bank jointly issue such a CBDR. According to the document:
“As an alternative to public block chains that run their own crypto-currencies, such as Ethereum, we strongly recommend that the Government and Central Bank of India introduce a Central Bank Digital Rupee (CBDR), which would be run on a public but centrally controlled block chain that would be able to process transactions through a virtual Turing machine, so that decentralized apps would also run on this platform.”
Indian crypto industry needs legal clarity
In this context, the NISG also points out the legal hurdles facing the Indian block chain and crypto industry, as there is as yet no legal clarity. Accordingly, the organisation calls on the government and regulatory authorities to ensure greater legal clarity in the future by issuing official statements on the issues concerned, rather than just non-binding public statements.
“Public statements, whether through the press or in the form of speeches, are helpful, but are far from having the binding force of official statements. If a regulator wants to apply its laws in a new way, it must first inform the industry how it intends to do so.”
The organisation also recommends “regulation with kid gloves”, as the block chain industry in India is currently still in its early stages. According to the NISG, the current regulation is “too restrictive” and does not take into account the potential of the technology.
Central bank backs off on crypto ban
Today’s news comes just days after the Reserve Bank of India emphasized that there is no official crypto ban. Only financial institutions licensed by the Central Bank would be prohibited from offering crypto services themselves. As previously reported, in 2018 the Reserve Bank of India had banned financial institutions from providing services to crypto companies, which was tantamount to a crypto ban. To what extent the new “rectification” removes this is unclear.
The RBI had made the relevant statements at a court hearing before the Indian Supreme Court, as a consortium of crypto-companies had sued for the lifting of the “ban”.