Indian Government Worried About the Impact of Digital Assets on Rupee

By Swati Kishore

The Subhash Chandra Garg-led high-level inter-ministerial committee that is responsible for the development of the regulatory framework surrounding the use of digital currencies in India is reportedly worried about the impact of cryptocurrencies on the Indian currency of Rupee.

We had reported on February 4, 2019, that the Indian government is accepting suggestions on crypto regulation from a law firm.

As reported by Quartz India, it has now come to light that the committee is conflicted over the issue that once digital assets are allowed as a mode of payment in the country, that such a move could potentially destabilise the Rupee.

The crypto community in the the world’s sixth largest economy believes that such a risk will not arise any time soon since the cryptocurrency market is still in its nascent stages.

The Founder of Indian digital asset exchange Koinex, Rahul Raj elaborated the point saying,

“At this point, it may be a bit premature to worry about this as right now even globally only a handful of payments are made using virtual currencies and that will be the case till blockchain reaches the scale that say Mastercard or Visa have. Therefore, there is considerable time before that concern even comes up.”

Interestingly, the government of India has so far shied away from giving digital assets the status of legal tender in the country. And if that remains the case, it will be practically impossible to purchase goods and services in India using cryptocurrency. The Koinex Founder explained,

“You can’t buy goods and services in India using any other currency such as the dollar, pound or even gold and it needs to be converted first into rupee to complete payments, a stance that can also be adopted for cryptocurrencies.”

Previously, the central bank of India had shown interest in launching India’s very own cryptocurrency. However, it is not a secret that the Indian government is uncomfortable with the thought of digital currencies, especially Bitcoin.

Despite the hard stance on cryptocurrencies in the nation, India has been forthcoming when it comes to the adoption of the underlying Blockchain Technology.