2017’s wild crypto rally might seem like a distant memory, but the interest that it created in crypto regulation around the world is still unfolding. The Reserve Bank of India (RBI) is still working through the idea of an official crypto for India, but it looks like they are kicking the can down the road a little further.
According to the Hindu Business Line, the RBI is waiting to see how the peer-to-peer digital economy shapes up before making any definitive plans for an Indian Central Bank Digital Currency (CBDC). The RBI created an interdepartmental working group to study the benefits of a CBDC, but to date, little progress has been announced publicly.
Although there has been no public announcement of an official policy shift, the Hindu Business Line quoted an anonymous source as saying, “The government doesn’t want the digital currency any more. It thinks it is too early to even think about a digital currency.”
Crypto Regulations are Slowly Evolving
India has been experimenting with radical new forms of monetary policy for a few years. Indian President Narendra Modi’s decided to ban most of India’s supply of cash in November 2016, which caused huge problems for the nation.
India’s population relied on cash savings, and the ban of high-value banknotes was a headache for people who were sitting on piles of cash that became illegal over the space of a few days. A CBDC would have made a transition away from cash much easier for Indians, who had to queue for new notes or to deposit the now-illegal cash.
The irony is that despite the banknote ban, Indian households are still reluctant to trust banks to hold their money. Cash held as savings by Indian households has risen as the new supply of smaller denomination banknotes entered the economy. For now, the Indian government hasn’t created firm regulations that govern cryptos, which is keeping many investors on the sidelines.
Indian banks still don’t have a cohesive policy for handling crypto transactions, and many don’t allow their customers to trade with crypto exchanges.
The founder of Indian cryptocurrency exchange Belfrics told Hindu BusinessLine that, “It is premature for RBI to launch crypto-rupee, as more understanding of the crypto economy need to be achieved,” and, “It is a right decision to delay the process and see how the publicly traded peer-to-peer economy is shaping up.”
New York Forms Crypto Task Force
Last month New York Governor Andrew Cuomo signed a bill to create a task force to study cryptocurrencies, as well as other forms of digital currency and blockchain. New York Assemblyman Clyde Vanel introduced a bill last week that would move the creation of the task force forward.
According to Assemblyman Vanel, the task force will include institutional and retail investors, technologists, consumers, representatives of enterprises and academics. The task force will be appointed by Cuomo, and also the state Senate and Assembly. To begin with, the task force will submit reports on the technology by Dec. 15, 2020, but their scope could evolve once the task force takes shape.
Vanel commented that New York, “leads the country in finance,” and “will also lead in proper fintech regulation.” He went on to state that, “The task force of experts will help us strike the balance between having a robust blockchain industry and cryptocurrency economic environment while at the same time protecting New York investors and consumers.”
New York was one of the first states to create an official license process for crypto assets, called the BitLicense. Over the last four years only 14 of these licenses have been issued, as the US is still moving slowly on crypto regulations at a federal level.
Other nations, like Singapore and Malta, have been much faster to create solid regulations for crypto development, which could give them an advantage as time goes on. Peer-to-peer digital assets probably won’t follow the same financial model as the one that exists currently, which could put nations that are slow to create workable crypto regulations at a major disadvantage.