Indian Official Declaration: Cryptocurrencies Are not Suitable for Payments or Settlements

A director of the Reserve Bank of India, S Ganesh Kumar, on Monday 6 said that digital currencies would be banned as a means of payment or settlement in India. However, this should not suppose as a direct banning to crypto in India, the second’s most populated country.

Financial Paper Money Control reported Kumar as saying:

“Our current position on bitcoins is that we will not be using it for any payments and settlements…though the underlying technology crypto-currencies will not end.”

These words of Kumar at the FIBAC banking conference dashed any hopes of the small but growing Indian bitcoin community, which wanted to see a higher adoption of bitcoin. At the time, the primary use of bitcoin is a store of value or investment opportunity, as only a few small companies accept bitcoin as a payment method. Sandeep Goenka of Zebpay, one of India’s largest bitcoin-related enterprises, said the following of Monday’s announcement:

“We will do our best to continue with our efforts to educate the government about crypto-currencies… It can be useful for India by turning the country into a fintech hub, to increase financial inclusion, and there are several other benefits of it.”

It is not the first sign of the lawmakers of India’s skepticism towards crypto. A finance ministry panel, earlier this year, recommended that bitcoin and other cryptocurrencies should not legalize because of illegal acts such as money laundering can easily be committed using crypto.

Although the ministry is hostile against bitcoin, they are still considering the possibility of a fiat-based virtual currency. Earlier this year Sudarshan Sen, an RBI Executive Director said:

“Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely.”

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