Is India Bitcoin forbid?

Is India Bitcoin forbid?
Sunrise with fog over Mumbai. Image of Tawheed Manzoor via Flickr.com. License: Creative Commons

Several statements by representants of the Indian Central Bank RBI (Reserve Bank of India) are currently causing the fear that India is planning to ban cryptocurrencies or at least regulate more strictly. However, the statements allow a relatively wide interpretation freedom.

Already in September, the central bank of India (Reserve Bank of India, RBI) commissioned a working group to check whether Bitcoin can be a legislative means of payment and how to deal with cryptocurrencies in general. This was due to a request from the Ministry of Finance in August to strictly regulate bitcoins and other cryptocurrencies.

Sudarshan Sen, a director of the RBI, recently explained at a conference in Mumbai: “At the moment we have a group that is looking at Fiat cryptocurrencies. By that we mean something that can be an alternative to the Indian rupie to say it that way. We take a close look at this.“Sen also explained what the difference between Fiat cryptocurrencies and bitcoins is:“ It will be Fiat if, for example, a central bank publishes a digital currency that can be moved in cyberspace without having physical money in your pocket.“Accordingly, the central bank sees non-state cryptocurrencies like Bitcoin as a competitor:“ As for non-Fiat cryptocurrencies, I think that we do not feel comfortable with them.”

One could understand this in two ways: First, the central bank is actively looking for a digital addition to the rupie that it wants to use and promote it itself. In this case, she has now decided not to use Bitcoin or another free cryptocurrency, but to develop her own “Fiat cryptocurrency” herself. In the second variant, the central bank checks whether it will allow existing cryptocurrencies as possible digital additions to rupie. In this case, she has now decided to only allow “Fiat cryptocurrencies”, but to ban cryptocurrencies like Bitcoin or to regulate strictly.

Sen did not say further details at this conference.

His colleague S. Ganesh Kumar, however, gave another hint that further expands the two variants for debate: “Our current position on bitcoins is that we will not use them for any payments and settlements … However, the technology subject to the cryptocurrency will not end.”

Here the decision between the two variants on the interpretation of the word “We” (we) is: “We” mean the employees of the central bank? So, as already thought, she did not imagine to process and settle cryptocurrencies like Bitcoin – which would have been an unpredictable and interesting but quite unexpected and less likely step? Or does she mean by “we” the entirety of the Indians, which would mean that she would go the way in the way from China at the end of 2013 and to prohibit it that you pay with cryptocurrencies?

The central bank recently expressed concerns about Bitcoin and other cryptocurrencies. Already in spring there were rumors that a Bitcoin ban was pending. After these were apparently wrong, it was said in summer that Bitcoin and cryptocurrencies were “black money”, which can be misused by terrorists and fraudsters to wash money. The central bank also said that it had not awarded a license or permission to companies that work with Bitcoin or other cryptocurrencies.

For the blossoming Bitcoin industry in India, this news is at least worrying. After India had drawn more than half of the circulating cash in a night-and-fog campaign around a year ago, the demand for Bitcoin in India exploded exploded.

Today the initially very chaotic situation has calmed down to some extent, but the great successes failed to do: The number of taxpayers could be increased by 10 million, which is not so much in view of 1.3 billion Indians. The drying of the black markets mentioned as the main purpose did not happen; Almost 99 percent of the cash found his way to a bank account. Other observers even recognize a strong increase in unemployment in India and a decline in the economy by banning parts of the cash.