Last year, India unveiled a campaign to wipe out huge amounts of so-called “black money” and streamline its largely cash-based economy. This move, however, has been widely considered a colossal failure which negatively affected the economy.
Now, the Indian government seeks to revitalize their economy as GDP drops to a 2 year low. The Business Standard reported Saturday that while creating a legal framework for Bitcoin and other digital currencies, the Indian government is considering launching its own state-cryptocurrency backed by the central bank.
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“Whenever the decision is taken, the cryptocurrency will fall in the domain of the Reserve Bank of India and some Acts such as the Currency Act might have to be ammended,” the report added, hinting at a long road ahead before a state-backed cryptocurrency takes shape.
The currency will supposedly be named “Lakshmi”, after the Hindu goddess of wealth and prosperity. The reason for a state digital currency is that government officials are uncomfortable with bitcoin as the cryptocurrency for settlement over a blockchain and are looking at government-issued cryptocurrency as a solution. In April of last year, the same government set up a committee to investigate Bitcoin. The committee recently submitted its report which recommended strict monitoring of digital currencies.
The committee has additionally recommended a task force be created consisting of officers from the RBI, the Securities and Exchange Board of India, the Income Tax Department, the Central Board of Excise and Customs, and the Financial Intelligence Unit.
A cryptocurrency ban within India remains highly unlikely. However, with China having banned exchange-based trading of Bitcoin and with India on track to regulate a central bank-mandated cryptocurrency, the community wonders if a crackdown against cryptocurrencies will boost the already near-record high market and popularity, or force holders to flee.