Cryptocurrencies and the blockchain technologies that support them are at the forefront of remittance-industry innovations, but these are under attack in India, where a complete crypto ban will be proposed in May.
Per reports, a draft bill is being prepared across multiple departments of the Indian government that would ban the buying, selling and issuance of all types of cryptocurrencies.
Government officials say that the bill, reportedly titled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019,” is urgently needed, according to minutes of a government meeting seen by the Economic Times.
The bill will be endorsed by the Indian Department of Economic Affairs, Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs, and by the Investor Education and Protection Fund Authority, an ET source says, and will be submitted to the Indian parliament following May’s elections.
Digital currencies like bitcoin allow funds to be transferred extremely cheaply but given their decentralized nature they are hard to track and, depending on how they are acquired, offer a veil of anonymity which Indian lawmakers say supports and potentially encourages illicit activities, including money laundering.
Increasingly, cryptocurrencies are being used as a vehicle for remittance. In Mexico, for example, bitcoin volumes are at record levels, partly due to White House threats against remittance payments from Mexican immigrants working in the US — remittances that, until now, had only been possible with fiat currency (US dollars).
Though money transfer specialists like TransferWise, WorldFirst and OFX have cut 80 percent from the cost of overseas payments, they aren’t yet able to offer drastic reductions in transfer speed, and this is where crypto (or blockchain) technologies come in: one of Thailand’s oldest banks, SCB, announced last week that international payments over a blockchain network (thought to be Ripple) had reduced transfer times from 2 days to 1 minute!
With its lucrative cross-border payments markets under threat from bitcoin and a wave of fintechs, the banking sector is fighting back by creating its own cryptocurrencies and blockchain-based platforms. JP Morgan announced in February the creation of “JPM Coin,” which promises instant payments between JP Morgan accounts globally. The coin is pegged to, and can be redeemed for, US dollars, thereby eliminating the extreme volatility that has dissuaded many from accepting payments in bitcoin or its competitors.
It is unclear at this stage whether any bill proposing a ban on digital currency transactions in India would also apply to the corporations that make up the bulk of the customer base at banks like JP Morgan, or whether this would solely target personal ownership and trading.