With due respects as a person to Mrs Nirmala Sitharaman, I would like to draw her attention to the working of private crypto currencies and why not banning them is a big mistake.
I am worried that she is making statements as if she has not done anything wrong and only taxed Crypto transactions without recognizing them. The whole world believes differently and Madam, you are the lone person who is clutching to this idea that taxation of an asset does not provide any legitimacy. I am sure that even Courts will not agree with your view when referred.
To understand why traditional Bankers like us consider Private Crypto Currencies as the death knell for the legacy Banking system is that they are basically created with the objective of killing all Banks. Hence “Anonymity” is the basis of such cryptos. We can keep referring to Bitcoin as a representation of such private cryptos. Since all these private crypto currencies are fungible, it is immaterial if a person acquires Bitcoin or Ripple or Monero or Ethereum. All are currencies which can be used for transactions across the world in replacement of dollars or other legacy currencies.
The Digital Rupee will not fall into this category since it does not provide anonymity and hence it is not going to attract any investment from the current Crypto investors. According to one estimate there is a holding of about Rs 30,000/- crores in Bitcoins etc in India with about 50 lakh investors. The figure may actually be much more since all political parties must be having their own stock of bitcoins as part of their digital black wealth.
Please understand that Bitcoin wallets can be opened outside India just like opening an email account in Yahoo or Gmail. Only if the wallet account is opened in India with the Indian exchanges, there could be a question of KYC. Otherwise there is no KYC. One can always provide an anonymous email and anonymous mobile number to open a bitcoin wallet account.
I request you to contact some honest techie adviser to know if this is possible or not.
Once a wallet account is opened, there are various ways of using it if required with onion routing or garlic routing to make it impossible for any law enforcement agency to trace the transactions.
Please check with a reliable techie advisor if this is true.
Donot believe the version of those who have made you believe that Bitcoin is not recognized, Bitcoin is a technology to be retained and supporting bitcoin will lead to a boom in tax collection etc.
There is a need for you to understand that once the crypto currency is legitimized, there will be many service providers who will hand hold investors to get accounts opened outside India and send all their wealth to the foreign wallet accounts. They can be brought in to India when required or kept outside. There will be flight of capital and money laundering through these accounts. Some of these will be sleeping cells of terrorists. With the use of “Ripple” network even the international transactions will be routed outside the international central banking system. This will encourage exporters to park their earnings outside India.
You donot have to take my word for all this. Please consult your techie friends and get the confirmation.
However at any point in future donot pretend that you were not aware of these intricacies.
I hope you will take my advice to understand how Bitcoins can be used for money laundering and why your taxation proposal will not be able to prevent this.
Naavi
