India’s Central Bank Bans Regulated Entities From Dealing In Virtual Currencies
bloombergquint.com
bloombergquint.com
India's biggest problem is unofficial economy and low tax base, and is trying to expand tax base and trying to get more and more people into formal economy. Cryptocurrencies are not really tax-base expansion friendly even if regulated. So this makes sense from the point of view.
The interesting part here is Government of Andhra Pradesh is a member of Ethereum Enterprise Alliance, so now how are New Delhi and "Amaravati" going to deal with this situation would be interesting.
Of course there is the other aspect that cryptocurrencies are probably not very well known yet to those that operate in the black market ...
That said,
> The regulator, however, decided that it will promote the use of blockchain – a public ledger that serves as the backbone of bitcoin – in financial services for strengthening transparency and improving inclusion.
As reported earlier, Wall Street is already cooling down on the blockchain hype:
https://www.reuters.com/article/us-banks-fintech-blockchain/...
So, what plans does the RBI have for blockchain?
Same ones my buddy at State Street did: say “blockchain” to a superior to get budget for long-needed database (and other back office) upgrades.
Power brokers control the activity and discourse of the populace. Ignore the rules for personal enrichment (the US Congress and others pass rules for us [ banning insider trading] but not them).
This isn’t just an India thing
The basic premise, stated another way, is that power tends to corrupt.
https://www.youtube.com/watch?v=hVwIZzGHxwc
There's a crazy amount of regulation and paperwork for even the most benign business. And much of it differs as you go between the different areas, so businesses that have to say transport goods from Mumbai to New Delhi may have to stop 4-5 times to fill out each regions regulatory paperwork.
It's really not surprising to such a top-heavy state being wary of something which seems like it can't be as easily controlled top-down. Which we saw with the "banning" of those paper bills - which had a significant negative impact on the economy, as much of the economy manages to function in spite of those rules, large by side stepping them.
India will never catch up to China's growth unless they clean up this mess. And even beyond growth, it benefits no one to have so many businesses feel the need to completely bypass all the rules because they are so bad ones in between the good.
I don't disagree with your analysis but I think the conclusion is debatable. The problem isn't India is top-heavy, China is too. The difference is that China is highly centralized. It's been that way since the Qin dynasty. The Qin dynasty standardized everything from weights, measures, and even the language itself. The example you cited is a problem of standardization. If all the paper work is the same, the process should be pretty simple and efficient.
That said, India is a VERY diverse country and seems very tolerant of differences. Part of this may be because India was not historically centralized nor homogenized. Just as a personal opinion, it would be a shame for India to lose its cultural diversity in its pursue of growth and efficiency. Once you lose the culture, it's really, really hard to bring back.
This is no longer true. With implementation of E-way Bill under GST you need not stop anymore. A single e-way bill is enough. Also those stops were needed earlier because there was no uniform taxation between states. However with implementation of GST there is no need to fill up paperwork while transporting goods between states. Just need to procure an e-way bill. This came into effect from April 1st 2018. Changes are happening rapidly so take these old videos with a grain of salt.
Read more about e-way bills here: https://www.livemint.com/Politics/ZHOXrBEfe2TR5ALJJFZGoI/All...
Quoting: "To avoid technological glitches, the GSTN and the National Informatics Centre have ramped up the infrastructure. The system can now handle 75 lakh e-way bills daily, compared with 26 lakh earlier. To prevent harassment of taxpayers, e-way bill rules specify that goods will be inspected only once during the journey except in cases where specific information on tax evasion is received. Further, in case a vehicle is detained for more than 30 minutes, the transporter can report it on the portal."
India's regulation love is mind-boggling and matched only by Venezuella or North Korea. Only difference being that people beat the system no matter what.
My family decided to start a fully self-funded private school in 2004. Here are the steps.
1. First we need to get NOC from the local government which we will get only if we show the land, building etc. Most important factor in NOC is "need". So we need to show paperwork that there are not enough schools nearby for the projection of new students over 10 years and all that.
Clearly, you can't argue that "my school would be better". (We paid $10k as bribe to get this)
2. There is lot of regulation related to teacher's salaries and qualification, teacher-student ratio etc. Fee regulation etc. but relatively easier to get with very less bribe.
3. Right to Education Law (RTE) kicks in.
We have to do tremendous amount of paper work and give 25% of our seats to government for free which the government allocates based on complex lottery that uses caste/income etc. Given that our school caters to lower middle class a plumbers kid is paying to subsidise education of electrician's son because the former did not win the RTE lottery.
We have to increase fees of remaining 75% students to cover the expenditure on these 25%.
The government promised a small money per seat by law. However for last 4 years we have not got a penny. The amount is any ways very little.
But then RTE has various other provisions and the violation of that results into withdrawal of NOC, closure of school and criminal proceeding against the principal/management.
Here are some of the provisions: - There should be X toilets per 100 students. - You can not dismiss any student for any reason. (not just 25% RTE students but all 100% students) - You can not set any admission criteria what so ever. No tests, interviews, family background nothing. Pure lottery only. (For the 75% students)
Most parents know this and will simply refuse to pay fees after we give admission to their kids. All we can do is to beg.
4. There is 100% exemption to any school that is run by management whose members are Christians, Muslims, Buddhists, Jain or Sikh. (which means RTE applies to your school only if the management is Hindu or Jewish)
5. RTE resulted into closure of thousands of schools in India and mushrooming of Church run schools.
My family closed the school in 2016. There are various court cases still going around this.
This was put in the constitution as a guarantee to linguistic and religious minorities that they could maintain their identity within the vast majority. This was in liu of the more unpalatable option of providing special representation in Parliament for each minority group. In subsequent years after independence the Supreme Court clarified that the minority status would be determined by state. So presumably, you could set up a school in Mizoram if you are a Hindu. Or a Hindi language school in Tamil Nadu. If I am not mistaken, Sindhis run their own colleges in Mumbai under these minority rights.
Article 30 gives special rights to christians and muslims and subsequent amendment 93 also gives right to occupation to minorities but not to Hindus and Jews. RTE was deemed unconstitutional even in the light of Article 30 in TMA Pai vs State of Karnataka thus giving rise to 93rd ammendment.
> If I am not mistaken, Sindhis run their own colleges in Mumbai under these minority rights.
You are most certainly mistaken.
States can only declare linguistic minorities. Religious minorities are determined by a body called NCMEI. NCMEI by law can not have a Hindu as its member as a result a body that comprises of Muslims and Christians gets to decide if a Hindu school in Mizoram can start a school and avail minority benefits. They have categorically refused to do so in Kashmir, Nagaland and in Kerala so far.
Binance works from Hong Kong afaik.
Then is it really "decentralized"?
The opposing argument to concentrated mining pools is that they still require individuals to point to these pools and are essentially acting as proxy votes. It's decentralized because mining pools only have as much power as individual participants allow them to have and there have been multiple occasions where individuals have forced an action such as the UASF.
PoW seems to be on the outs recently with PoS, DPoS, DAG and other algorithms emerging as potential alternatives.
To start with RBI needs to sit with IT dept. And please include some CS professors.
Man, I really hope they consider Taler. No blockchain bullshit, but it would be really nice to have a privacy-first digital currency launched in .in
There aren’t restrictions on who you can send them to, what time of the day you can send them, the maximum amount you can send. You don’t have to worry about your bank account being frozen or suspended. You don’t have to wait days for transactions to go through. You don’t need a bank account at all to store them. The more that banks restrict the way people are allowed to use their money, the more it will push people into crypto currencies.
State backed crypto currencies are unlikely to succeed in the same way that decentralized ones like Bitcoin are because central control allows the bank or government to print as much as they would like and alter transactions however they see fit. It’s unlikely there will be any sort of public ledger/blockchain or accountability. Eventually people will catch on to this and figure out a way to move back to Bitcoin and others. It may take 10-20 years or longer, but I don’t think this charade is going to last forever.
In addition, I am always wary when banks do things like this citing reasons like: “Our goal is to protect our customers. It’s too volatile. It’s used for money laundering.” Banks have never and will never care about their customers. In fact, they benefit from their customers going into debt (credit card fees, loan interest, overdraft fees, etc). How concerned were the banks about issuing loans to customers leading up to the 2008 housing crisis? Money laundering is still primarily done using cash and often with banks turning a blind eye.
This is all about banks understanding the threat of crypto currencies and trying to maintain control of the financial system by eliminating any and all competition. They know that widespread crypto adoption will make them obsolete. I think this battle will go on for years, but I think eventually the banks are going to lose. It’s possible that they already know that too.
Could be true. But are we seeing adoption grow? I see a lot of merchants ending support for bitcoin and other crypto-currencies. I think more people use it as a speculative investment than as a currency right now.
The lightning network and other software will solve many of the issues with regards to transaction fees and delays. I think adoption will eventually come back.
The fact is, if you hold your savings in USD in a bank account with close to zero interest rates, your life savings will be worth less every single year (purchasing power, not dollar amount). With a deflationary currency such as gold or bitcoin, that is not the case. I think as people realize this, it will eventually become a self fulfilling prophecy where people are pushed into cryptocurrencies as a hedge against hyperinflation (it is already happening in certain countries such as Venezuela).
It stands to throw off the entire balance of power in the world which is why people in high places are trying to slow it down and prevent it from happening, but I believe it is just putting off the inevitable. That is why I am saying it wont happen today. I said 10 to 20 years as an aggressive estimate, but in reality it could take 50 to 100 years.
I also believe the entire surge in Bitcoin and crypto and subsequent crash may have been orchestrated by big players in order to shake the public’s confidence and trust in these markets to push adoption farther down the road.
The difference between the USD and BTC isn't that one loses value every single year and the other doesn't. It's that one is actively managed to ensure it retains ~98% of its purchasing power over the course of the year and the other isn't.
That 2% fall really isn't such a huge deal for people that want instant access to the only money their creditors are required to accept, the only money they can pay their taxes in and the only money that's widely accepted elsewhere. (Other assets might actually gain purchasing power more often than not, but can also fall relative to that impending tax bill)
Most of the world's wealth is stored in assets which are not money or bank accounts anyway. And if people want to hold all their savings in something with a better return than their bank account, then bonds and stocks have been around, fungible and convertible to cash via apps for a very long time and payment app-ized versions of those are a far more plausible alternative to traditional banking for the average person than intrinsically worthless cryptographic signatures "mined" in China and shilled for on forums. The only thing unique about cryptocurrency as an economic asset is that it has no legal tender status and zero income stream, rights or assets attached to it. There might have been people orchestrating surges and crashes, but that's pretty much the best case scenario for assets which people have no reason to value at all.
Yes, Bitcoin has lost a lot of value since Christmas, but it is still up around 600% from last year. I am taking a long term view here. It is unfair to criticize Bitcoin’s decline because in terms of an asset class it is still miniscule. I consider it in the early price discovery days. Amazon stock declined from $107 to $7 around 2000-2001 so you could make the same argument that buying Amazon was a bad investment then, but you would look pretty dumb today. For reference, just last year, Bitcoin’s market cap was around $15 billion. That would be the equivalent of buying Amazon at around $32 based on the current price.
The Bitcoin volatility will stabilize over time, and I think it will become a legitimate asset class. I would like to ask you in response to
> There might have been people orchestrating surges and crashes, but that's pretty much the best case scenario for assets which people have no reason to value at all.
Why would you say that fiat currencies have value (other than because the government says so)?
This is a good question. Two reasons. Firstly there are many people who must obtain dollars in future to repay debts (all new dollars are created as someone's debt) or to pay taxes of around a quarter of GDP per annum. Secondly, central banks actively intervene to decrease supply when purchasing power drops faster than they desire. Since people need dollars, others will be able to purchase things they sell with dollars.
Bitcoins on the other hand are created permanently, and BTC-denominated future repayment obligations are tiny in relation to supply. Since virtually nobody needs Bitcoin there is little reason other than optimism for value to remain above zero, never mind increase over time.
AMZN was not the only stock to drop in 2000-1. Enron also dropped. Bitcoin does not have the properties of AMZN (a legal claim of a share of ownership of a business which has since become very successul indeed) but does have similar properties to those of Enron share certificates after the company was wound up (people have spent money acquiring them, their authenticity is verifiable and they cannot be duplicated, but they grant no claim on any tangible assets or income stream and thus are only worth what some Enron-certificate-enthusiast is willing to pay for them)
Using the boogeyman of hyperinflation is also rather dishonest, as that takes much, much more to happen than just the 2% inflation target the Fed has.
A more reasonable benchmark might be the S&P 500.
Even if you keep aside the regulation aspects, there is no assurance that money kept in a cryptocurrency account is safe. The fact that bank accounts are insured is a big deal. Nobody apart from the government is gonna sign up for that. And if someone does, they will not do it without tracking the flow of money.
All of that applies to cash under your mattress.
And "You don’t have to wait days for transactions to go through."? Nonsense. Blockchains don't scale.
If you wanted to pay someone in another country $1,000 would you trust sending that much money in the mail?
> Blockchains don’t scale
This is very shortsighted. I’m not talking about now. I’m talking in 10 or 20 years. The internet didn’t scale in the early 90s. Software by its nature is designed to evolve. I think there is a high likelihood Blockchain tech will rival traditional payment gateways in the next 10 or 20 years.
I know this will sound crazy to most people but one of the things I am hoping to see from artificial superintelligence is for repressive outdated human institutions like the large countries to be replaced by systems that are contemporary and functional.
And this does not make them obsolete. The government will easily win. Bitcoin wouldn't have near the amount of adoption, even for drug markets if it was made illegal.
I don't get how anyone thinks governments are so weak or powerless. How some fancy math obsoletes or in any way inhibits a coordinated group with weapons and societal backing to use force.
Edit: And I like bitcoin and have been playing with it for years, when CPU mining worked. Enough so that I could retire if I find my all my old hard drives. I think it's cool and I don't buy into the existence of money laundering other than a fake crime used by lazy prosecutors and greedy governments. But still saying that government is obsolete... come on.
Forget crypto, governments are moving towards banning cash which is far more threatening to our liberties.
What are you on about with AI, that seems unrelated.
This is true, however if those countries (and companies within) take out loans denominated in another currency, and want to pay in their local currency, they still have to worry about the offshore exchange rate via instruments like non deliverable forwards.
I wouldn't be surprised in the next coming years if NDF markets expand to using cryptocurrencies to enable even greater speculation on those local currencies.
Crypto was referred to as drug/illegal money in its early days.
You'd think that country that has issues with tax compliance and has already done things like removing large denomination bills would want to move to a fully traceable currency.
Furthermore it would make even more sense that it would use a currency of its own creation rather than one that isn't under its own control.
I think most of finance has accepted that cryto currencies are the future, it just won't be bitcoin or Etherium but rather a currency for each country/region just like fiat currencies we currently have.
But, it's not for everyone. You obviously believe that governments need to control finances. That's fine. I think most people don't want freedom. But there's certainly SOME percentage of the population that really want and value freedom. That's why Bitcoin has and will continue to have value.
You can seat the people representing 90 % of hashing power on a stage: https://twitter.com/lopp/status/673398201307664384
That's decentralization now?!
Things that make sense decentralised to service freedom have a track record of becoming centralised to service convenience. Source: The Master Switch by Tim Wu.
Global regulation remains a risk for cryptocoins. If the only remaining utility is the black/grey market, cryptocoins become much less valuable and will end up losing a lot of interest.
The fact that the assets may not be easily traceable make them a more lucrative target for criminals to use unlawful threats against innocent owners as well.
I genuinely hope you don't believe this. Some, not most, are toying with them like a cat batts around a ball.
[citation needed]
We don't know what the future will bring. But each country with its own cryptocurrency doesn't look like an equilibrium to me. I don't think that advance economies will ever fully outlaw bitcoin, so if it, in fact, becomes a store of value, developing economies will eventually adopt it, even if it's behind their government's back.
But I don't think they will fully outlaw it, since there is no reason to restrict the options that citizens have to invest in. If people can invest in wood or orange juice futures, there is no reason, not to allow them to invest in cryptocurrencies.
So long as you aren't hoping to use them as a tax fraud scheme I don't see why you would expect the government to want to shut it down. If you do hope to use it as a tax fraud or the like, you're likely in for an unpleasant time once the slow-but-steady process starts to focus on that.