The entire text of India’s Regulation of Digital Currency Bill was leaked last month before it even reached the Prime Minister’s Desk, and if form is anything to go by someone should probably be asking Gavin Williamson for his download history. But there again maybe not… this is beyond the ambition of a former fireplace salesman, now inexplicably back in Cabinet before the ink is even dry on his police report: this is much more important because once enacted, the new Digital Currency Bill will fire the starting gun for India’s Digital Revolution. And we didn’t need a leak to tell us what is about to happen…two recent events in particular have signalled the way forward and (without wanting to sound all Sweeney) it might be worth taking another look.
First, there was the Finance Minister being asked Parliament on 16th July whether cryptocurrencies had actually been banned in India. Note the phrasing of that question: it’s a clear reference to the legal uncertainty caused by a Reserve Bank embargo imposed on crypto businesses last year, a ban that immediately ignited the maelstrom of litigation now being fought out in the Supreme Court (and which isn’t looking good for the Bank).
And what was the Finance Minister’s Answer to the question? Well, with the smell of burning rubber that usually accompanies a hastily executed “U” turn, she simply said “No Sir”. The Government hadn’t “banned” cryptocurrencies and wasn’t planning to step into the storm currently engulfing the Reserve Bank: quite the reverse, it seemed to be opening the door to cryptocurrencies. What could be happening?
Three days later, on 22nd July, the second event happened: the long-awaited Garg Report on Blockchain Technologies or, as the geeks are insisting on calling it, the Report on “Distributed Ledger Technology” or “DLT” for short. For those of us of a certain age, “DLT” has other connotations but never mind that, back to the future: the Garg Report is looking like a real game changer for Blockchain technologies on the subcontinent.
For the first time since last year’s Interim Union Budget with its attendant anti-crypto comments from the then Finance Minister, the Indian Government has now accepted through its Inter Ministerial Committee that “digital currencies can have positive effects if deployed in financial services” despite there being “risks associated with them”. That little tail end qualification is, of course, nonsense as anyone with a shoebox full of Turkish Lire under the bed will tell you or, indeed, anyone with a stash of Sterling (wherever they keep it) given the UK now seems to be heading inexorably for a No Deal Brexit: the truth is that all currencies have associated risks; just some more than others, it depends which of them you have and when you have them.
Not that the venerable Chair of the Committee, Subhash Garg, was going to allow any tail end risk statement to dampen his enthusiasm when he tweeted after the publication of the Report (yes tweeted: this fellow is digital to his fingertips):
“The Committee is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services. It opens up the door for a possible official digital rupee”.
There you have it, you heard it here first (almost). Those more esoteric cryptocurrencies can stay in the shoebox with the Turkish Lire: the bright new grail of cryptofinance will be the Digital Rupee. This may well be the first time ever that a Non Fiat Currency will be issued with Government backing.
But who really cares about the U turns and the Geek speak? The fact is, this is how the Indian Government has decided to square the circle of its previous disavowals of Bitcoin last year, and at the end of the day it is the disavowals that matter not the language in which they are delivered. This is no time to demand sackcloth and ashes as penance for past sins. It’s the repentance that matters.
We should celebrate what is likely to be a threshold moment in the subcontinent’s technological revolution that will change the way we will all do business in the future or, as the Garg Committee put it: “DLT will play a major role in ushering in the Digital Age” (and no, they don’t mean an ageing disc jockey: see above). In its unbridled enthusiasm, the Committee even went so far as to advise Financial Sector participants to consider investing in Blockchain Technologies as a platform for trade finance, credit provision and KYC (where they can take advantage of much reduced compliance costs). Plus ca change…
However you phrase it, this is a Digital Revolution and India is leading the way.
North Block Capital Fund is an open-ended fund that listed earlier this year as a platform for investment in developing Blockchain technology ventures and ICOs: primarily in India where Red Ribbon Asset Management has more than a decade’s experience of advising on the dynamic changes in this, the fastest growing and most exciting large economy in the world.