Smt Nirmala Seetharaman
Honourable Minister of Finance
Sub: Regarding Crypto Currency Experimentation
I was going through the report in livemint.com and cnbtc18.com on the proposed regulation on Crypto currency in which you are quoted to be soft on the demands of the Bitcoin industry which is fighting to retain legitimacy to Bitcoin and other Crypto Currencies as equivalent to legit currency of the country.
We have been debating this for several years now and initially RBI was firm on the banning of private crypto currencies. Subsequently, since neither the Ministry of Finance and the Supreme Court was supporting them openly, RBI went quiet. This emboldened the Bitcoin community to spread out and trap many more innocent investors.
This must stop forthwith if we are honest to the economic future of India.
Legalizing Crypto currency is Financial Sedition
There is simply no logic for the Central Bank of the country to surrender its right to have control on the issue of “Currency” and any discussion on letting “Crypto” to be called a “Currency”. If accepted, there would be a flight of Bank deposits in India to “Crypto Assets” held with “Crypto Exchanges in the form of Bitcoin Wallets” . These will be like the e-mail accounts of proton mail and will not be under control of our regulatory authorities.
The legalization of Crypto currencies should be treated as “Sedition” in the “Financial Regulation”.
Crypto is Digital Black Money.
I do understand the political compulsions to be diplomatic in your response and there could be many in the bureaucracy who would like Bitcoin and crypto currencies to continue since it is the best way to receive bribes. For the same reason routine politicians are not keen in seeing the end of Bitcoins.
But the fact that Bitcoins and other Private Cryptos with which Bitcoin is fungible represent “Digital Black Money” does not need to be stressed. I consider that Modi Government will not succeed in its fight against Black money until the digital black money is completely eliminated.
If Privately managed Crypto currencies such as Bitcoin, Ethereum and the 5000 others are not banned lock stock and barrel, we will not be able to control the spread of black money. It is this money which will be used to fund the CAA protest, Red Fort attack or Kashmiri Terrorists or the Ransomware criminals. The dreaded “Deep web” is funded by Crypto currencies and banning them is a way to make the life of a Cyber Criminal difficult.
India can be an Anti-Crypto Currency Leader of the World
Many ask why India should stand different from many other countries who are tolerant of the Crypto currencies. But we must appreciate that India is India and should have the courage to stand for what is right. There are many countries in the world who are tolerant of Pakistani terrorism or Chinese aggressive military attitude. But it does not mean India should not take an independent stand.
I am confident that India has the capability to lead the “Anti-Crypto Group of Countries” and its decision to ban the Private Crypto currencies would go a long way to establish economic independence.
We need not be apologetic since we are in the right track
We observe that your statement “Government will have a calibrated approach”, “Want to ensure window for experiments” was made as a diplomatic statement in a TV debate and referred to the “Enablement of Government Controlled Crypto Currency”.
While “Block Chain Technology” is often quoted as an “Innovation” that needs to be supported and “Legalization of Bitcoin” is a way to recognize this innovation is a fake narrative.
Block chain as a technology has some use cases and may be allowed to be developed by technology companies as is contemplated in the draft bill. But this cannot be used to legitimize the use of Bitcoin or other Private Cryptos.
Experimentation should not end up in dilution of the regulation in any manner. All Crypto currency variants are all mutually convertible and hence banning them in toto is the need of the hour. Any small room given for innovation would be misused to develop a “Currency Mechanism” which will substitute Bitcoin with some other form of “Crypto Asset” which though legal would be used as a Currency. Remember how Ram Rahim Cult was using paper slips as currency within their premises and how havala operators use a currency note torn into two halves for carrying on their operations. Similar innovative “Digital Chips” will be developed as “Alter-Crypto” if law allows for their existence.
We are aware that there are many “Game Currencies” like the “Linden” which are convertible to Crypto Currencies and hence even a small opening provided to the technology innovators will encourage back door entry of Bitcoin in a different form.
RBI Crypto Rupee will break FEMA and encourage Crypto Mining Malware
It should be recognized that the Government backed Crypto currency will not be different from the Digital Payment systems we already have in the country and would not add anything significant to the economy.
At best it will only encourage zombies who will try to keep mining for the “Crypto Rupee” and result in depleting the scarce resources of “Electricity” and “Computer resources” besides “Productive time” in search of digging for Crypto Rupees in their internet connected computers.
This will continue to encourage “Crypto Mining Malware” to be developed and installed in the mobiles and computers of innocent malware victims and encourage more Cyber Crimes.
Hence there is no logic for taking any action in this regard immediately. Let it be there as an enabling provision but if introduced, it will defeat our Foreign Exchange Management system making Rupee Convertible. You can separately assess the problems arising out of full convertibility of Rupee.
Experimentation with an evil like Bitcoin is like experimenting with drugs. We have to say No even the first time.
There is no need to be apologetic
Even the views of Elon Musk need not be taken seriously since he may have reasons of his own to retain his wealth in the form of Crypto Currencies.
There is no need to be apologetic to the Bitcoin community as if we are “looking inward”. Sadguru Vasudev often reminds us that Indian culture has been strong because of how we have focussed on “Inner Engineering” of the human being. Yoga is an example of how looking inward actually unleashes the power to address the worldly challenges.
Our stand could be termed as standing firm on principles and not “looking inward”. Neither “Fintech” nor “Fast Moving Technology” have any right to destabilize India as a country. We may support technology but donot hesitate to regulate attempts of disruption whether it is in curbing cyber crimes, regulating delinquent digital media or those who want to take over the financial control of the country.
We have recently shown such guts in taking on Twitter or Face Book and the recent joint action by Mr Ravi Shankar Prasad and Prakash Javdekar on Intermediary Guidelines was an indication that at last the Modi Government is willing to shake off its hesitancy and take tough decisions.
As a person from Karnataka whom you represent, I would be extremely happy if you can also show the exemplary courage to “Say No…firmly…to Bitcoin…even for experimentation”.
The non introduction of the Bill in the first part of the session is itself a show if hesitation by the Ministry of Finance to support the legislation. This should be rectified quickly by the passage of the bill to ban Private Currencies in the second half of the budget session without fail.
Thanking you in advance.
6th March 2021