In a cascade of countries that spoke against Libra, the Facebook project to create a cryptocurrency, the Indian government clarified on Saturday 6 July that it is not interested in approving the operation of digital currency in its country and who is drafting a law with severe penalties for banks that trade with this type of digital currency.
The main reasons supported by the Indian government, the third largest economy in Asia, to oppose the ambitious project are the lack of explanation and clarity of the conditions of use of the Libra and the lack of confidence when dealing with a private cryptocurrency.
This is the second statement this month in which the governments of a country are skeptical about the project. On 3 July, the United States Financial Services Committee published a letter addressed to the directors of Facebook, in which it asked the technology giant and associated companies suspend the development of Libra, the cryptocurrency e calibrates, the digital wallet that was launched alongside the virtual currency.
Whatever it is, it would be a private cryptocurrency and not something we felt comfortable with
The project, led by Facebook managing director Mark Zuckerberg, promises that when Libra is launched, it will function as a stable digital currency, which does not fluctuate much because it is supported by currencies and values approved by different governments.
Although Facebook has not formally requested permission from India to launch its digital currency in the country, nor has it responded to requests from the specialized press looking for an answer to the Asian government's decision not to allow its entry into this country , India is one of the largest markets for its applications. This year, Facebook has launched its Pay WhatsApp feature, which allows transfers of money via chat, after a pilot of months in that country.
"The design of the Facebook currency has not been fully explained"Undersecretary for Economic Affairs Subhash Garg said an interview in New Delhi last Saturday. "But whatever it is, it would be a private cryptocurrency and it's not something we felt comfortable with".
The Indian government's decision comes weeks after the strategists of the Jefferies Financial Group, a US multinational and an independent investment, They said that Libra, from Facebook, will have continued explosive growth in emerging markets and particularly in India to succeed.
The analysts of the study supported their position by stating that Facebook users in India have doubled since 2015 to around 310 million and are expected to increase to around 440 million by 2023.
But before it can take advantage of this huge user base, there are regulatory hurdles that must be overcome. The Supreme Court of India, in a provisional measure last year, supported the ban on the Reserve Bank in April 2018 after the cryptocurrency exchange operators launched the measure. The problem is close to an audience on July 23rd.
The Indian central bank is defending its territory to manage electronic money and is also trying to suspend the crime routes using digital currencies, while many nations like Abu Dhabi and South Korea are creating rules to allow cryptocurrency trading more secure.
The regulator of this country is of the opinion that this type of digital currency cannot be treated as money, since the law requires that they be made of metal or exist in physical form and be stamped by the government.
Separately, the government's bill entitled "Prohibition of cryptocurrency and regulation of the official digital currency law in 2019" proposes a period of imprisonment from one to ten years for those who extract, preserve or sell digital currency, according to a report by BloombergQuint published last month.
* With Bloomberg