India Waves Off Plans For State-Backed Crypto

india banking

Call it the great indecision?

The new year has dawned with India’s government stating that it is eyeing cryptos with “due caution” and that there are no “clear recommendations” as to cryptocurrencies.

That caution extends to all manner of considerations in the realm, including the issuance of a state-backed cryptocurrency, and even the regulation of the digital currencies.

As reported in Quartz and other media outlets, the government has said that there remains an “absence of a globally acceptable solution and the need to devise a technically feasible solution” ... and it all warrants “further study.”

Study and study and tread carefully, it seems. The site noted that the committee that issued the report includes stakeholders such as the Ministry of Electronics and Information Technology, the Reserve Bank of India, the Securities and Exchange Board of India and the Central Board of Direct Taxes.

Turns out, too, that the cryptocurrencies are still not being recognized as being legal tender (note, though, that there are of course Indian crypto exchanges still actively trading).

And, as reported, there no longer are plans for the Reserve Bank of India to launch a national digital currency. There had been speculation earlier in the year that the bank would bring to market a Central Bank Digital Currency, but money laundering and cyber threats have been cited as reasons for caution.

The fact that India is still studying the issue means that cryptos of course can and will be revisited. But consider the fact that, as Quartz noted, there is not even a timetable for decisions. One caveat is that India is among several nations that make up the Financial Stability Board, which has 20 nations on its roster. That board has said it has reviewed the rapid growth of crypto and has found that “crypto assets do not pose risks to global financial stability currently.” India’s relatively cautious stance comes after a few years of studying cryptocurrencies, and, it should be noted, also comes against a backdrop where demonetization efforts have been in full swing under Prime Minister Narendra Modi.

One cue might come from the U.S. Securities and Exchange Commission, which is eyeing the digital currency landscape closely, and where regulations are likely to come through in 2019.

Then again, just a few days ago, the police in the Indian state of Jammu and Kashmir have stated that there is “heightened risk” for the public when it comes to investing in cryptocurrencies. There could be a sudden crash, and a prolonged one, the inspector general of the state has warned, and as quoted by the Business Standard.

For India, at least, it’s a case of hurry up and wait.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.