India proposes law to ban cryptocurrencies, create official digital currency
thehindu.com
thehindu.com
Every Satoshi can be traced back to when it was mined. The IRS now requires Americans and resident aliens filing income tax returns to report on their crypto holdings. Lots (maybe most?) people use exchanges like CoinBase. (Remember, not your keys, not your coins.)
If the government believes (they do not even have to prove) your Satoshis were ever used for illicit transactions, they can legally seize those assets. (Sorry, we don't think you were involved, but these coins are criminals.) To simplify things they just need to show a judge reasonable cause of structuring sometime in the coin's history. That has to be super easy to do. https://www.goldinglawyers.com/structuring-cash-transactions
Because structuring is a criminal law, they would need to show a court a bit more to convict. But before a conviction they could make your life complicated with dumb rationale to a judge for a warrant or seizure notice, and that has nothing to do with cryptocurrency, everyone relies on the government and private persons not making their life complicated.
Unless the USA imposes the strict FATCA and AML to all global exchanges , forcing countries to act as if exchanges are banks and comply,It would be easy to just use non-American exchanges stay out of trouble.
But you're right. If USG does go down this path of crypto suppression (and this is pure speculation at this point) US based exchanges are vulnerable first.
I imagine nothing like this would unfold without coordination with the EU and five eyes.
You'd achieve about the same result tax wise w/ muscular KYC/AML requirements for crypto exchanges/custodians in the US as you would w/ a ban.
This is blatantly wrong, do you have a source for that? Transactions can have multiple inputs and multiple outputs; "which satoshi comes from which input" is not a valid question; transactions are about value sums of inputs and outputs.
Next consider that the current regime has a charismatic leader who gets a lot of vociferous support for anything that can be spun into the “anti-terrorism” and “national security” angles.
Since cryptocurrencies are only used by terrorists and tax evaders dealing in drugs and such (this is a sarcastic take here, but is believed so completely by the supporters of the government), they must be banned.
[0] https://en.m.wikipedia.org/wiki/Payment_and_settlement_syste...
You can still have a centralized token asset as your currency. It defeats the purpose of open source and public blockchain utility, but gives a government massive control over its currency.
gives them an excuse to ban an uncontrollable currency/asset. But the paradoxical thing is that if the gov't creates their own crypto they control (and ban the "real" decentralized crypto), they give legitimacy to the idea of crypto, and thus, make bitcoins and other uncontrollable cryptos even more popular. You can't actually ban crypto, anymore than you can ban maths.
If I wanted to do so as a leader I would:
* Log which citizens visited any crypto related domains (exchanges, crypto wallet app servers etc.)
* Make a law banning the holding or exchange of crypto. Give everyone 1 week to comply.
* Make a government address to send coins to for disposal, and publish a form to fill in to say you have disposed of your holdings.
* Contact everyone in your log telling they need to fill in the form (even to declare they no longer have any holdings).
* After the deadline, arrest anyone who has not filled in the form or who declares zero holdings and subsequently visits exchanges etc.
* Sure, this method will miss some who carefully use tor. But that's a tiny minority. *
* Move coins to cold storage wallet.
* Memorize seed phrase.
* Destroy written copies.
* Walk casually through checks at airport or frontier as a tourist, carrying nothing but chlothes.
* Do whatever you want to do with your money.
You can choose to leave your country for good taking your wealth with you against your government laws, if things get really bad.
The government can issue an arrest warrant for you, and have you extradited from wherever you went.
Figuring out who to arrest is harder, but it's a pretty small pool of people heavily invested in bitcoin who have suddenly vanished abroad flouting lots of cash with no obvious source...
Bitcoin might have been designed with some other purposes in mind. It could also be co-opted by a government. For instance, I suspect that subsidized energy for bitcoin mining represents a government monetary policy, but I don't know the extent of the influence or its real purpose.
Moreover, like a technology, people will use money if it's useful to them. For instance people in countries with "bad" money will often use it for daily expenses, but move the bulk of their assets into instruments based on the currencies of the US, Europe, etc.
Banning crypto is another policy altogether.
Just that it will make cryptocurrency use/facilitation illegal, and thus prone to fines/jail time.
Little wonder that even with the pompous BJP at the helm, all they can manage to do is implement policies that they themselves had blocked the previous set of kleptocrats from implementing earlier.
However, there's also the notion of "tracking corruption".
China apparently is a cashless society (according to a Chinese person I interacted with recently). I'd imagine that if it's good for China, it's good for India.
(Indian here.)
It is convenient and cheaper for everyone.
It is not necessarily better for privacy or human rights, it can be better for taxation and other government functions.
Whether anyone likes it or not, the world is moving towards this model. It is better to have controls and regulations on how the data will be used rather fighting about keeping cash.
Maybe in a semi-ideal world, but not in a country like India. Less than 30% of Indians own a Smartphone, which is where a lot of the "convenience" of going cashless comes from. The Indian government made a recent (superficial) push to get up to 80% of Indians a bank account (up from ~50% form a few years ago), but it doesn't take a FAANG engineer to realize that the majority of these people don't have easy access to banks, banking apps and especially something like crypto.
Going "cashless" has tremendous negatives for the world's poorest. India's demonetization push, which forced people to exchange their old notes for new ones, is a clear case study of how major change to currency has a disproportionate impact on the poor.
source for the bank account stuff: https://scroll.in/article/923798/over-80-now-indians-have-ba...
I have worked in Micro finance in India ~2010-2013. I have spent some time studying and trying to solve this problem. The logistical challenges to provide banking for smaller communities is immense and costly. Despite government owning 69% of the banking sector and having mandates for unprofitable rural branches.
Microfinance was getting demand despite predatory interest >24% ? Why? Because there are no viable competitors offering less with less friction. Traditional loan sharks charge even more. State Banks and various coops are inefficient in their processes. Banks need a lot of documentation starting from PAN, salary and deeds which only landowners have, The banks are so far off physically for the rural workers, even if they could get financing the risk of multiple days of wages lost is too mush.
Most banks expect you show to regular income to get any kind of loan. If your bank is 10 km away and you make wages daily/weekly, it is not feasible to deposit and withdraw cash every time you need to, you are never going to be approved for the loan.
Indian banking system is simply not working for rural poor users, expecting a daily wage worker or NREGA beneficiary to go 10+ KM to withdraw cash from an ATM that they cannot read instructions is not viable. The traditional model of having middle men disburse cash is extremely corrupt and actual beneficiary gets a small fraction of the money.
Yes smart phone penetration is less ( although I suspect it is bit more than you say, given the number of WhatsApp users in India)
If we need a chance in hell to be able to service poorer part of the country, banking needs to be cheap and that is not going to happen at a branch and it has paperless as possible.
Cash is an expensive luxury the country cannot afford.
If Indians want to go hold + transact cash in random BTC wallets then by all means they are welcome to do so illegally and subject themselves to scrutiny down the road.
Is it that if i wanted to pay someone I could just skip the intermediate credit card / google pay/ bank account and just send money p2p.
love to learn more here.
[1] I don't know the name. Here in Argentina we have a "National Bank", and also the "Central Bank" that is somewhat like the Federal Reserve, and a few other national banks that are privatized and nationalized back from time to time. Also each Province has it's own bank. (And there are also private banks.)
No one can call out that the emperor is losing his clothes if they are terminated :)
1. Codification of the law of Torts.
2. No-fault divorce.
3. More devolution of powers and policy making to states.
4. Ending the practice of Unelected Governers.
5. Remove power of the central government to dismiss elected state governments.
6. Dismantle the British Era civil service designed to preserve undemocratic control over the population to a modern federal system where all decision making authority lies with elected representatives only.
7. Repeal of colonial era police and criminal codes, and moving to a more humane police and criminal justice system as in other democratic countries, including the establishment of jury system.
8. Give equal representation all states in the upper house as in the US senate(2 senator s from each state).
You can absolutely attempt improvements in one dimension while othe r more important ones are sorely neglected.
The article is unclear abot the panel, buit I guess they have little impact on the issues you mentioned.
Yes. And you will be harming yourself and your country by doing so, by prioritizing the wrong things.
Ending up "better than now" (by prioritizing the wrong things, but still improving some dimension)
is worse than
Enging up "much better than now" (by prioritizing the most important dimension to improve)
India has a functioning payments system. It has a dysfunctional tax system and a massive black market. Banning cryptocurrencies doesn’t really do any practical harm. It does take away, or at least make more difficult, a major route for illicit payments.
"House is on fire? Let's throw out the trash first! That would be a better than now house, a cleaner, better smelling, burning house!"
The concept of marriage in a tradition-based society like India has a completely different meaning than "let's voluntarily have a contract, and we can break it off any time we feel like it."
In order to protect the sanctity of marriage (straight or gay, I support both), the government must resist calls to make it easy to divorce. Divorce must be a painful, punishing process if society is to continue to take marriage seriously. (It must nevertheless be possible for either party in the marriage to initiate a divorce to completion. That's non-negotiable.)
Just my view on this subject. And I accept that others with different experiences than mine may have different views.
I don't necessarily agree with OP on it should be complicated , however there won't be any danger of reduction in legal marriages
It's just so strange that marriage is super easy. Divorce is like several months of processes (even both sides are amicable).
This might increase unhappy people stuck in a marriage, which likely won’t make the society take marriage seriously; the opposite seems true.
I understand the concept of having different views of how serious of a commitment marriage should be, but I don't understand why "I want things to be this way" automatically means "the government should make things this way". They're the scariest institution that exists because of the overwhelming power they wield. Hell, they're largely defined by it. Bringing the government in to play for every little thing seems to me like buttering your bread with a scimitar.
Yes, that's why it needs to be easy to divorce.
This is a terribly unfair system in the US, resulting in a voter from Texas (population 29 million) having 2% of the representation in the Senate as a voter from Wyoming (population 579000) or 5% of the representation in the Senate as a voter from Hawaii (population 1.4 million)
The system has its origins at a time when only land owning white men (by definition a minority at the time) had the right to vote, and senators were chosen by state legislators, not residents.
Only under that backward system could the current Senate seat allocation be seen as remotely rational, although it can in no way be viewed as just.
There was only 1 order of magnitude difference between the voting eligible population of the smallest state (Delaware) and the largest state (Virginia).
Today, that difference is 2 orders of magnitude, which is massive in comparison to what it was when the Senate seat allocation was designed.
Arguments for the preservation of that system are nothing more than shallowly disguised arguments for the continued selective erosion of voting power of individuals in high population states.
I have little doubt they would, and in doing so start a war. After all, it's happened before, and many people are plainly agitating for it now.
It's the "my enhanced privilege or your destruction, choose one" argument, which is a clear demonstration of one way the system codifies structural inequality and is transparently anti democratic. In a similar way, corporate lobbying distorts democratic representation, and by all appearances, they overlap quite a bit, differentiated only by the industry sector and which Senator they support.
Doesn't this goes against your argument then?
At a time where most of the voting population was at its peak uniformity, the 2-senator-per-state model was invented to ensure that the bigger states could not bully their way in federal legislation.
It was invented at the time where it was the least needed, since as you said, voting population was very uniform, so they mostly want the same things.
No. It was also anti-democratic at that time, but because the distribution of the vote was an order of magnitude less divergent, and the only people who could vote were landowning white men, it was able to succeed politically as a compromise.
Since then, its anti-democratic effects have magnified as the population divergence between states has magnified.
Why should 5 million people in a particular boundary have the same say as 50 million people living in another boundary. It makes no logical sense..
In fact it is anti-democracy as all citizens’ votes are not equal. In fact this applies to the electoral vote system also.
It's a net zero increase in the people's representation. It is a redistribution of representation toward smaller states, which has accelerated as state populations have diverged.
By contrast, a single-house legislature fulfills the desires of a national majority population the most quickly, which is what you are advocating for. This is at the expense of more careful consideration.
In other words, we do not agree on the definition of representation as you see it as maximizing activity and I see it as maximizing consideration.
The only thing it maximizes today is the continuation of hereditary and tribal concentrations of political power. It's a hostage situation, as the secessionists honestly will tell you.
The house represents the people, the senate the states. In fact, allowing the direct election of senators was one of the worst decisions ever made.
Random, but this is also why adding Puerto Rico as a state is extremely threatening to the political paradigm today. It would add 2 extra senators, who would most likely be democratic.
This is an argument that the Senate - a part of the federal government - should have less power than it does today, much as the House of Lords' power has diminished in the UK.
And even then, it was highly debated against, if I remember correctly even James Madison himself was against it, to say nothing of the anti-federalists.
In the end Madison saw it as a compromise towards the States, but after 200+ years I think the anti-federalists were right on this, it ended up like an aristocracy-like thing with too much power vested in its members.
7. Jury system is not without its flaws. You talk about colonial era policy reformation. Juries are a commonwealth tradition! Mostly colonial countries have them. india had them till the 50-60s, it was intentionally removed as part of justice reformation.
5. In a federal or union government the state should have this power. The integrity of the state requires this power. This excerise of this power needs strong checks and balances in place , but lack of adequate controls is not a reason not to remove it entirely.
6. Elected officials always have final decision making power. Civil servants are career professionals sure have the ability to influence the decision making in what and how they present information to elected officials, abolishing civil service is basically like having a company with only senior management and no middle management. Who will execute the policy decisions?
4. Governor's power in states (not union territories or ncr) is actually pretty limited and largely ceremonial. The president and governors are artefacts of transforming from a colony. They don't have much power constitutionally by design. Electing them won't solve the problems of the office, they will just influenced by corruption by needing votes as before .
Unequal voting power doesn't just arise from unequal votes, it also arises from correlated/block votes.
Making votes unequal can counteract unequal voting power.
Unequal voting is one of the reasons that e.g. people in urban centres can't just capriciously turn the far away state of Wyoming into a poorly managed nuclear waste dump.
49% of land in Wyoming is owned by the Federal government and the federal can and will do as it pleases with the land. The two senators are not why Wyoming is a nuclear waste dump.
The Senate structure all through U.S. history is vestige of the comprise between souther slave owning and northern factions. The number of states, or what area actually should be state was never carefully planned or designed to protect any minorities, it was always political decision to keep power balanced from day 1.
It is political fiction to explain it as to give minorities rights, rural rights were never the intent, no document ( Bill of rights, Constitution etc) actually talks about any rural or minority rights being protected , they instead talk about 3/5ths instead. It was always about slaves, it was a huge part of the economy for the southern states.
> 8. Give equal representation all states in the upper house as in the US senate(2 senator s from each state).
I am sorry, but we certainly do not need the worst parts of the US system. It is not just bad. It is catastrophic.
Having 2 elected houses is monumentally stupid idea that allows politicians to trap the system in blockages, while pointing fingers at each other for no repercussions.
> Codification of the law of Torts.
I hope this never happens. The super litigious part of America through civic laws leads to a lot of services getting needlessly expensive.
________
India has big problems, but almost none of them are the ones you mention.
A democratic system's main concern is not efficiency, but rather robustness of the democratic process. Authoritarian states are much more efficient in passing legislation, but at what cost?
Building structures at actively make that difficult are not democratic. They are just bad.
Just because if it enables in the distant future the ability to monitor where every paisa of my tax was spent on down to the lowest level e.g. It was used to buy the tiles for the construction of a public toilet in X village; it's certainly possible with blockchain.
Tomorrow BJP/CONGRESS can be tracked. Make political finding only by e-currency only for transparency sake.
I don't like 1984 like scenarios but also e-currency is welcome step from my side too.
Assuming that indeed we as humanity need blockchain (and decentralization technology) in the future, can a blockchain or any other decentralization technology work without cryptocurrency (or any other incentive for that matter)?
Any thoughts?
If the government stops meddling with the constitutional rights of its citizen subjects, restore Right to Information (RTI), remove election fraud and fundraising which is tremendously boosting the currently elected government - they would have bestowed a huge favor to its citizens and the future generations.
To curb nefarious use across borders, seems like the problem may be that more exchanges need KYC laws across the globe, not just in USA, and there would need to be some interpol-like oversight.
A globally public ledger seems like a tool, not a hindrance, against "Black Money". We just need more global cooperation and oversight between governments tracking the exchanges.
I don’t get it. Then there’s no price discovery and nobody wants to take a risk.
People will always want stores of value outside of monitored and adulterable (is that a word? hope the meaning is clear) centralized currencies. And the more trust is broken by the powers controlling the centralized currencies the more people will seek options to preserve and transfer wealth.
Something like the contrast between trying to procure cocaine vs aspirin
Would it be easy to transact OTC like that?
Enumerate all the countries around india,look at the political systems, demography, civil wars and genocide. India is a oasis in the region, to keep ot safe is a herculean task.
And believe me you, until very recently the US and co often backed unsavoury elements animical to Indian interests due to political and strategic compulsions.
Cue pearl clutching about slippery slopes.
Let's suppose, hypothetically, for the sake of reasoning about the future, that India passes this law.
OK, so now India has an official, single, state-sponsored cryptocurrency, er, "digital currency".
Well, India still needs the Internet to function to do that.
If the Internet is still functioning, and we presume that it will be, then how are they going to block other cryptocurrencies, er, "digital currencies" from being transacted?
Well, it could be China to the rescue!
China's firewall "block out all other countries' Internet" technology that is!
But if they use something like that, if they create a "walled Internet garden" in India, then what happens to Indian Citizens who travel abroad, and want to transact in India's digital currency?
In fact, what happens if two people, who are not Indian, who are not located in India, want to create a transaction in the new Indian digital currency with one another?
In other words, what are the rules of that game?
What happens if you have two or more Indian Citizens, who have accounts with the new digital currency, who act as minature "bankers", (that is, to produce surety/insurance/act as a source of trust) who then underwrite contracts which can be paper or digital, where these contracts are detached from the system, and can be traded by any number of other people in any number of other countries?
Make that practice illegal?
You could -- but this is sort of how paper currency first became valuable -- because it could be used as a proxy for gold (the goldsmith being the party that brokers the trust).
Also, it's sort of what commercial paper and stock markets and derivatives do... there's an underlying object of value, and then there's a piece of paper which grants some form of control to the underlying value, and a "trust broker" that guarantees that that relationship holds...
Make that practice illegal and you've basically banned stock markets and commercial paper of all sorts.
The banks and major financial players (who are well connected politically in whatever country we want to talk about) -- won't have that.
So it'll be interesting to see how this plays out, if India can control it, or if, more than likely, "creative" people in the finance markets will find ways to game the system...
Of course, the only other option is to let all of those uncontrollable digital currencies proliferate.
I'd say that India, with respect to creating this digital currency, is "damned if they do, and damned if they don't"...
In other words, there's no simple solution...
But, on a positive note, 10+ years or so into the future, future historians and policy makers should be able to get a whole lot of information as to how this played out, what was negative, and what was possitive, the effects and ramifications...