Cryptocurrencies have the potential to benefit a number of economies around the world but the largest potential market by far is India.
In November 2016, on the same day that Donald Trump was elected, Prime Minister Narendra Modhi surprised his citizens with a new sanction. The new ordinance known as “demonetization” got rid of 86% of the paper notes in the country in just a few weeks.
This week, the State Bank of India has reduced the daily withdrawal limit to just 20,000 Rupees ($270) a day. The stated goal of these moves, fraud prevention and reduction of black market activity, are indeed commendable. The current administration has also come a long way towards opening up their market to foreign investments.
However, one effect of the reduced availability of cash is the dependency on digital payments. We know that the Reserve Bank of India has imposed a sweeping ban on all crypto assets, while the court system and finance ministry continue to drag their heels. After months of delays, the next Supreme Court hearing on the matter is expected for mid-November.
Hopes are high that the ban will be overturned but we really don’t know what they’ll do. On Tuesday, the government issued this rather ambiguous statement as part of their Financial Stability and Development Council report.
Several commentators have pointed out that the term “private cryptos” probably refers to private coins like Monero and Zcash but it really isn’t clear.
Crypto advocates in India continue to lobby the government and hope for a ruling in their favor, but the truth is that the parties in charge of digital payments in the country stand to lose a lot if crypto assets are made legal.
All in all, those who really care about financial freedom will probably be better off shifting focus. The financial revolution will not be won in any courtroom or government office. It starts with the citizens. At the moment most people don’t know much about bitcoin or crypto. They only know what they see in the media, which isn’t too positive at the moment.
