Well, hind-sight is 20-20 but let me post-rationalize.
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.
With the alliance, Govt of AP is primarily aiming at integrating blockchain tech in to governance and that's that. Their vision is still perfectly aligned with RBI guidelines and will perfectly act as a case study for the rest of the states to follow should things fall in place. Not sure what "situation" are you hinting at.
There are many bans in place in India but the law enforcement agencies infrequently enforce anything. There are building regulations that are flouted openly, environmental regulations that are frequently ignored. I don't think this would affect the black market as much.
Of course there is the other aspect that cryptocurrencies are probably not very well known yet to those that operate in the black market ...
India has strict laws on tender or cash. Personal foreign currency holdings are severely restricted. So, this doesn't come as a surprise at all.
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:
Well, yes. The Albanian Lotto Riots of 1997 are still remembered, many Albanians lost their shirts over it. People made money through the free markets after the fall of communism, but there wasn't much of a banking system yet or experience with investments, so Ponzi schemers jumped in to fill that need. When these schemes failed, there was rioting that the police and military suppressed only half-heartedly (they had lost hard-earned money themselves), so local gangsters took it on themselves to restore order and became warlords in the process. If this sounds like a big mess, it was. English Wikipedia even calls it a civil war: https://en.wikipedia.org/wiki/Albanian_Civil_War
Whatever word is appropriate, it was basically a complete disappearance or the rule of law. Basically, imagine all the police and military disappearing instantly, in a country that was already quite corrupt and infantilised by communism (not that I'm sure a more 'civilized' country would do any better under the circumstances).
The sad thing is that while the Indian government has all these regulations to prevent you from holding $2,000 of Bitcoin, or goes on adventures like demonetization disaster which affect ordinary working people, giant scams and irregularities (like Nirav Modi getting away with billions, or prominent citizens being named in the Panama papers) are business as usual.
A few tweaks to the phrasing and you’ve basically described all nation state behavior and the entire history of human attempts at “society”.
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).
Anyone who want's some insight/context into India's economic regulatory environment from which these controls came from should watch this (2 part) video:
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.
"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"
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.
> 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.
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.
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."
True, but taxes like GST are really trying to make all this easy. Change comes slowly in India and off late there have been some changes that were once thought impossible to implement (like GST)
And mostly these regulations are used by more established aka politician & bureaucrat bribing companies and conglomerates to kill competition in the market. In India regulations are not for consumer rights protection but for highest bidder so that regulatory mechanism can be unleashed with full wrath on the competitor. In his book the former head of central bank wrote that in the Indian state of Madhya Pradesh no one could set up any industry in mining if there were not part of the Jindal group. No entrepreneur or businessmen would get license from the state government if they were not part of the Jindal group. The Jindal group would in turn pay the politicians and bureaucrats in money and sex. Thank god that Soviet Union failed and global economic conditions with that forced India to become more market friendly. But these regulations are still there.
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.
Not unexpected. China might follow suit too. Developing countries who are experiencing capital flight will want to close the cryptocurrency loophole. For the same reasons, our governments are unlikely to want to chase away the golden goose.
Blockchain without decentralization isn't that exciting. The problem with banning crypto is that there will be an entrepreneurial group of people willing to accept cryptocurrencies for a high fee and turn it into fiat or a commodity in a neighboring country. As someone developing in the crypto space, I look at this tech as the formation of a global, secure, always-on, always-accessible, standardized, permission-less database. When people talk of "the cloud" I feel that crypto platforms fit that description more aptly then traditional services.
Since the BJP government took power, India has had multiple faux pas from the central government front. They swapped out Raghuram Rajan with a no name yes man as the governor for central bank. Then they did demonetization, a quixotic adventure at getting rid of black money by making all legal tender obsolete on one fine morning. This caused deaths amongst people standing in queues in front of ATMs. They couldn't print the new money fast enough. To protect the new money from being used in black market, the party spread a rumor about some advanced tech embedded in currency to make it easy to track from satellites. This is demonetization 2.0 and would permanently damage all progress Indian startups made in FinTech space.
I'm surprised they waited so long. But decision meshes well with the government push for government-approved (UPI?) digital payments, all with pretty strict KYC policies.
Indian governance is a mess right now. A govt sending a message like this while collecting tax in parallel from the same system is a contradiction to me.
To start with RBI needs to sit with IT dept. And please include some CS professors.
>Accordingly, the RBI has constituted an interdepartmental committee that will submit a report on the feasibility of a fiat digital currency. The committee will submit its report by June-end.
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
I've said this before but it bears repeating: GNU Taler wants to give the government a backdoor. That's privacy in the same way the Clipper chip in the 1990s was privacy.
The matter is not entirely clear from the article. Surely they aren't banning individuals from holding bit coins? What does regulated entities even mean: I don't think they mean bitcoin exchanges because they aren't regulated; probably it means banks.
The irony of all these banks and governments banning crypto currency purchases is that all they are doing is strengthening the use case for crypto currencies to begin with. One of the most appealing things about crypto currencies (specifically decentralized ones) is that you are free to hold them and use them however you like.
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.
>They know that widespread crypto adoption will make them obsolete.
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.
For people to be "pushed" into cryptocurrency they need to encounter a situation where they want to do a financial transaction and their usual payment systems don't work. How likely do you think that is?
You are right in highlighting the issues with current financial systems. But what is the basis for assuming that a decentralized and unregulated system will be way better in addressing all the issues you have highlighted?
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.
They're not banning cryptocurrencies, though. They're just saying that the regulated banks, presumably the ones that are insured with taxpayer dollars, aren't allowed to speculate with them.
>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.
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.
Zero! That is extremely wishful thinking. Even as a historical artefact Bitcoin will never go to $0. Hell, Bitconnect is still trading at $0.69 with $13,000 volume today. I really hope this is wash trading.
Cryptocurrency is just high tech money. Governments that ban cryptocurrency just prove that they are obsolete governments.
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.
A friendly AGI would replace so, so much more than just banking or institutions it makes no sense to even bring it up.
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.
[+] [-] sremani|8 years ago|reply
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.
[+] [-] starving_coder|8 years ago|reply
[+] [-] pm90|8 years ago|reply
Of course there is the other aspect that cryptocurrencies are probably not very well known yet to those that operate in the black market ...
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] amrx101|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] thisisit|8 years ago|reply
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?
[+] [-] JumpCrisscross|8 years ago|reply
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.
[+] [-] HarryHirsch|8 years ago|reply
[+] [-] mercer|8 years ago|reply
[+] [-] firasd|8 years ago|reply
[+] [-] mx92je082|8 years ago|reply
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
[+] [-] dmix|8 years ago|reply
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.
[+] [-] hangonhn|8 years ago|reply
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.
[+] [-] shripadk|8 years ago|reply
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."
[+] [-] newyankee|8 years ago|reply
[+] [-] amrx101|8 years ago|reply
[+] [-] Karishma123|8 years ago|reply
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.
[+] [-] walshemj|8 years ago|reply
[+] [-] lumberjack|8 years ago|reply
[+] [-] hackme1234|8 years ago|reply
Binance works from Hong Kong afaik.
[+] [-] runewell|8 years ago|reply
[+] [-] harichinnan|8 years ago|reply
[+] [-] shripadk|8 years ago|reply
[+] [-] harichinnan|8 years ago|reply
[deleted]
[+] [-] kylehotchkiss|8 years ago|reply
[+] [-] kang|8 years ago|reply
To start with RBI needs to sit with IT dept. And please include some CS professors.
[+] [-] captn3m0|8 years ago|reply
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
[+] [-] CryptoPunk|8 years ago|reply
[+] [-] billfruit|8 years ago|reply
[+] [-] flowctrl|8 years ago|reply
[+] [-] j0hnM1st|8 years ago|reply
[+] [-] amrx101|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] craigc|8 years ago|reply
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.
[+] [-] jopuwep12489|8 years ago|reply
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.
[+] [-] skybrian|8 years ago|reply
[+] [-] pacetherace|8 years ago|reply
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.
[+] [-] s73v3r_|8 years ago|reply
[+] [-] asgiobiob|8 years ago|reply
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.
[+] [-] OscarTheGrinch|8 years ago|reply
[+] [-] onecooldev24|8 years ago|reply
[+] [-] hndamien|8 years ago|reply
[+] [-] craptocurrency|8 years ago|reply
[deleted]
[+] [-] tiemand|8 years ago|reply
[deleted]
[+] [-] osrec|8 years ago|reply
[+] [-] ilaksh|8 years ago|reply
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.
[+] [-] MichaelGG|8 years ago|reply
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.
[+] [-] X6S1x6Okd1st|8 years ago|reply
What are you on about with AI, that seems unrelated.
[+] [-] hcnews|8 years ago|reply
Crypto was referred to as drug/illegal money in its early days.