If you remember, the Budget 2018 was not all that receptive towards Bitcoin. They actively discouraged it too due to legal ramifications and concerns about customer protection.
The Centre, however, is now keen to bring out its own crypto-token and cryptocurrency. Moreover, RBI and Government’s venture into blockchain arena is bound to make investors flock to it. The Ministry of Finance had set up a panel in December 2017 under Mr Subhash Chandra Garg (Secretary of Dept of Economic Affairs), to propose procedures to legalise and oversee cryptocurrencies.
The panel’s plan seems to be in accordance with RBI’s proposal to launch digi-coins previously. Meanwhile, they have been striving to curb cryptocurrency exchanges for some time. There is also the opinion that the whole purpose and essence of cryptocurrency would be lost if the government takes control as they are decentralised ledgers. It could also lead to a ban on other cryptocurrencies like Bitcoin, Ripple, Litecoin, etc. The panel is indeed considering to take possession of other digi-currency a punishable offence.
Unsurprisingly, it has impacted trading. Many cryptocurrency exchanges in the country (like Zebpay) were forced to shut down. Government and RBI’s main concern is money laundering and the possible deception of susceptible investors; this is why they plan to take control. Countries like Venezuela and Iran already have successful models. So, there is no reason why it shouldn’t work here in India. RBI has plans to name its digital currency ‘Lakshmi’ – after the Hindu Goddess of Wealth & Prosperity.
Lakshmi will co-exist with the paper currency and not as a replacement. It is expected to use the same blockchain technology as that of Bitcoin. Another attraction of virtual money (for the government at least) is the potential to reduce the cost of printing of currencies.