India is a curious case. At first glance, the Asian country is the hotbed of talent in the realms of finance and technology. However, recent regulations coming from New Delhi’s political chambers regularly play spoilsport.
For years, the government and the central bank have been clamping down with regulations that have crippled the struggling Indian cryptocurrency industry. Taking orders from the Reserve Bank of India [RBI], several public sector banks have in the past, sounded warnings to their crypto-customers, even threatening them with credit card blocks and frozen accounts.
The Indian banking and political elite might not be embracing cryptocurrency anytime soon, but an important movement is underfoot. Can India turn the tide?
As the Indian cryptocurrency industry looks to emerge from the ashes, educating the uninformed populace is pertinent and for the same, a mass information campaign is required. The Economic Times, one of the most respected print and digital media publications in the country, is spearheading this campaign with their latest Op-ed.
TK Arun, Editor at the Economic Times, authored a recent opinion piece, the title of which will not please politicians hell-bent on curbing the crypto-movement. The title, “Why India should not outlaw cryptocurrencies,” may be inflammatory, but the headline’s subtext draws on the cryptocurrency’s towering objective of breaking the “U.S Dollar’s stranglehold.”
Calling the RBI proposal to ban virtual currencies outright and even push out a law that would jail citizens who hold any form of cryptocurrencies “myopic,” Arun asserts,
“India needs to be open to the possibility of using cryptocurrencies for international payments bypassing the dollar.”
Primarily talking about the prospect of “stablecoins” and fiat-linked ones at that, Arun refers to the goal of using a cryptocurrency operating on a blockchain in cooperation with several governments, presumably without the globalism-averse Trump administration.
Referring to stablecoins as a “subgroup” within the cryptocurrency framework, Arun draws on the difference between Bitcoin and its fiat linked adversary. He lays emphasis on the nature of stablecoins to be pegged to a fiat currency, operated at the behest of a bank(s) and “other reliable entities” as the key demarcations. However, these very points are why the larger cryptocurrency community is increasingly growing impatient with the stablecoin market and is instead, opting for crypto-collateralized stablecoins.
Arun also took readers back to a time when the United States used the post-war Marshall Plan as hostage to strike down John Maynard Keynes’ proposal for a new unit of account, in order to settle international payments. Instead, the U.S forced the US Dollar [USD] all across. Arun called this a great travesty that “never saw the light of day.”
From using the greenback as a means of “global seigniorage” to “weaponizing” it, Arun argues that the latest economic dispute between Washington and Tehran can tantamount to the latter. He suggests,
“It [the United States] can borrow as much it wants from the rest of the world and simply print dollar bills to repay the loans. Other countries cannot follow that example. That is bad enough.”
The only solution, according to Arun, is the creation of a payments system that allows transactions sans a U.S counterparty, settling in a fiat currency other than the US Dollar. The crux of the problem is the absence of such a globally widespread currency that is present with every major trading nation in the world.
Enter decentralized currency. Well, digital assets, at least.
Adopt-In or Drop-Out
If this payments system does come about, besides being a tremendous political feat to oust the United States, it would be a technical conundrum to implement a “blockchain-based currency.” Arun states that if this unlikely scenario does manifest, a ban on currencies operating on a blockchain “would hurt” New Delhi’s ability to participate in the global payment network of the future, with another economic giant picking up the mantle. In his words,
“If India’s legal system makes all blockchain-based currencies beyond the pale, that would hurt India’s ability to take part in, leave alone lead, an effort by a coalition of nations to create a payment mechanism outside the dollar framework.”
Even from the perspective of a low trade-oriented, global-power capturing nation, cryptocurrencies can provide tremendous benefits, especially as the retail world continues to grow. Highlighting the growing remittance market where India is one of the leaders, Arun attests to the FinTech industry’s responsibility to the same.
Make your Mark
Moving on from a prohibition stand-point, Arun appeals to the Modi administration to ‘take the lead’ on this global payments project, by roping in China, the European Union and other complying governments, with the apex of this country-matrix being occupied by the Bank for International Settlements.
He added that the objective of this sovereign consortium should be to prevent one fiat currency issuer from ‘acquiring a stranglehold’ over the global economic module, while also providing a launchpad for a “new stablecoin linked to a basket of currencies.”
The ET Editor added that the onus of this operation would be placed not just with one central bank, but with the central bank of central banks, the Bank for International Settlements [BIS].
Arun presents a plan for the theoretical adoption of cryptocurrencies from a global perspective, and a move to be free from political shackles from an Indian perspective
The key to a change in perspectives about cryptocurrencies in India is information, and that change is firmly afoot in the country.
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