The Supreme Court is right in the cryptocurrency – editorials
The Supreme Court rightly ruled that the effective ban on cryptocurrencies from the Reserve Bank of India (RBI) is disproportionate, and overturned it. Well-intentioned as the central bank’s decision might have been, and despite the defense that it simply hijacked the entire banking and financial system that oversees all the uncertainty about the cryptocurrency, its move in 2018 was a ban, and virtually ruled out Baby with Bath water
The baby in this case was Blockchain, the underlying technology behind cryptocurrencies like Bitcoin (which was bath water). The RBI problem with Bitcoin is understandable, even if it is not legitimate, the inability to regulate the currency that was not sovereign, but there is much to be said about the premise of the underlying distributed ledger in Blockchain. In addition to making transactions more transparent and secure, Blockchain also has the ability to reduce the cost of cross-border transactions, including remittances. India is the largest recipient of remittances in the world, and much of this comes from expatriate Indian workers. And the cost of remittances is high, 5-7% in some cases. One of the Sustainable Development Goals set by the United Nations is to reduce this to 3% by 2030. Technologies, such as Blockchain, can make this possible. Cryptocurrencies also promise to provide an alternative global currency to the dollar, something that developing countries like India would do well to explore. And there is nothing that prevents RBI from issuing its own cryptocurrency (mint once suggested that it could be called Bharatcoin) to take advantage of the environment, although with appropriate regulations and safeguards.
While cryptocurrency companies will applaud the verdict, they have a legitimate cause for concern: the government has repeatedly indicated that it shares the central bank’s views on cryptocurrencies. There has also been talk of a law that completely prohibits them. Before enacting legislation, the government would do well to understand the benefits of cryptocurrencies. It should allow their use and work to create an effective regulatory regime for them.