Tag: india

India Taking a Step Towards CBDC After the Debut of its Blockchain-Based Payment System Vajra?

India has been taking multiple stances when it comes to blockchain and cryptocurrencies, as cryptocurrency has not been deemed legal, but not considered illegal either. The National Payments Corporation of India (NPCI) recently designed and adopted a blockchain-based system for automating payment clearing and settlement processes.  

Earlier this year, the Bank for International Settlements (BIS) published a report stating that over 70% of central banks were exploring central bank digital currencies (CBDCs). The Reserve Bank of India (RBI) said that it would be investigating the issuance of a CBDC. The central bank has created a group to examine the potential of a rupee-backed digital currency. Since the emergence of private digital tokens, the aim of issuing a CBDC is to reduce the costs of creating paper and metallic money. 

Shaktikanta Das, the central bank governor, revealed the central bank had held discussions with other governments and central banks regarding CBDCs. “It is very early to speak on a central bank issuing digital currencies. Some discussions are going on. Technology has not yet fully evolved. It is still in the very nascent stage of discussions, and at RBI, we have examined it internally,” he added. 

‘Too early’ for CBDCs 

However, the Indian government considers the trading and issuance of cryptocurrencies illegal in the nation.   

Das said it was ‘too early’ to talk about a CBDC, as technology has not matured enough. Das made it clear that the central bank is entirely against private digital currencies, as he believes that the sovereign has the right over this function. 

Shaktikanta Das, Governor of the Reserve Bank of India. Image via Bloomberg

“The world over, central banks and governments are against private digital currency because currency issuance is a sovereign function, and it has to be done by the sovereign,” he explained. “As and when the technology evolves with adequate safeguards, I think it is an area where the Reserve Bank will certainly look at seriously at an appropriate time.” 

The blockchain-based payment system, Vajra 

Although the Indian government is still skeptical about the use of cryptocurrency, the National Payment Corporation of India (NPCI) officially announced its permissioned blockchain-based platform, Vajra, to make payment processes more efficient and transparent.  

As a permissioned blockchain-based platform, only registered parties under the network administrator are allowed to be part of the blockchain network. The three types of nodes on the platform consists of: 

1) Clearing House Node, which has the administrative rights to the platform and is directed by the NPCI. It also has the right to add a new node on the platform. 

2) Notary Node, which validates transactions only of the Aadhar biometric, is used for the authentication process, receiving transactions only from the clearing house node. 

3) Participant Node, which is represented by the banks, and has the ability to post, receive, and view transactions.   

The NPCI highlighted some of the key benefits of blockchain, stating that the distributed ledger technology will help the payment industry with higher resilience, and efficiencies through automation and transparency. The NPCI said, “DLT is an incorruptible decentralized ledger that not only provides a transaction medium but also acts as a repository for all transactions in hashed digital packets called blocks. The availability of transaction in the distributed ledger will reduce reconciliation steps and also increase transparency among participants.” 

The platform allows for a system of self-executing contracts under the rules of the smart contracts. The Vajra platform aims to ensure zero to minimal processing time and efficiency for dispute resolution.  

Unfriendly towards cryptocurrency? 

In April 2018, the Reserve Bank of India banned financial institutions from providing services to crypto firms, including exchanges, which put them out of business. The ban was effective in July 2018, although several crypto industry stakeholders filed writ petitions with the supreme court to challenge the ban. The court has been scheduled to resume the hearing on Jan. 14.  

The bill drafted by the interministerial committee (IMC) reflected on Das’ statements. Subhash Chandra Garg, the former head of the Secretary of the Department of Economic Affairs, submitted the draft bill entitled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” to the Ministry of Finance in February 2019.   

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However, the draft bill has a section on CBDC and its proposed legal framework. The IMC advised of an open mind when introducing an official digital currency in India. 

The IMC recommended the government, “In consultation with the Central Board of the Reserve Bank, may approve [the] digital rupee to be legal tender with effect from such date and to such extent as may be specified.” There were reports of the Indian government considering issuing a state-run digital currency called Lakshmi in 2017.  

The RBI also stated to have considered the potential launch of its own centrally controlled cryptocurrency. Deputy Governor, BP Kanugo, said, “RBI will produce a report, and they will explore the feasibility and desirability of issuing a digital currency by the central bank. These are issued by central banks; they constitute the liability of the central bank, and they will be in circulation in addition to the paper currency. It also holds the promise of reducing the cost of printing of the notes.” 

The Income Tax Department of India has also been secretly training its officials to look into cryptocurrencies. As cryptocurrencies have been seen as a gray area for the Indian community, the Income Tax Department sent notices to various cryptocurrency investors. Crypto investors were previously doubtful of how to show their investments in their tax returns.  

Blockchain adoption in India 

Blockchain adoption in India has been increasing as officials in the country are trying to put together a regulatory framework to govern the technology. The Minister of State for Electronics and IT (MeitY), Sanjay Dhotre, said that a strategy is currently being put together by regulators to research into blockchain applications in the financial industry, cybersecurity, and government agencies since November 2019. 

The country has been using blockchain in its renewable energy sector, with the blockchain-based energy trading platform Power Ledger pioneering in the industry.  

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India’s Crypto Bill Hearing Postponed by Supreme Court

The Indian Supreme Court has set a new date to hear the crypto case, which was originally scheduled for July 23. The purpose of the hearing was to address the writ petitions against the central bank’s crypto restriction. On July 24, the court announced a tentative date postponed to Aug 2, however, they later updated it to July 25 for all the crypto writ petitions. 

The Reserve Bank of India issued a circular regarding the banning of regulated financial institutions from providing services to cryptocurrency-related businesses. Since the ban, which was effective since July 2018, banks were obliged to close accounts of all cryptocurrency exchanges in India. Many crypto exchanges including Coindelta, Koinex, and Cryptokart all shut down due to unclear regulations. One of the largest crypto exchanges in India, Zebpay shut down its exchange operations in India. After the ban, stakeholders in the industry filed writ petitions to challenge the ban. The Indian supreme court was scheduled to hear all crypto-related petitions in September 2018 but postponed the hearing repeatedly. 

Subhash Chandra Garg

The draft bill was released to the public this week, by the interministerial committee led by the Chairman Subhash Chandra Garg also known as India’s Secretary of Economic Affairs and finance secretary. This bill has officially been submitted to the government, which also contains the “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019.” The bill specifies, “No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India.”

Although Indian banks are not allowed to offer their services to cryptocurrency-related businesses, cryptocurrencies are currently not banned in India. The interministerial committee has proposed the ban through the draft bill but will need to take many steps before it becomes law.

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India’s Demand for Blockchain Developers Soars by 700%

Blockchain technology is substantially being embraced at an alarming rate across the globe. This trend is expected to continue because it is speculated that the market cap for products and services utilizing blockchain will be at least $8 billion by 2022.

India has emerged to be one of the significant players in the blockchain space. For instance, according to Applancer, the demand for blockchain developers in this nation was elevated by more than 700% in 2018. This trend has been instigated as many new blockchain firms have set foot in India as they seek to offer blockchain services and solutions. 

India has been making incredible progress in the blockchain sector. This has made it a favorable blockchain development destination. This aspect can be illustrated by the announcement by Mukesh Ambani, the Reliance CEO and richest businessman in Asia, that he could incorporate the largest blockchain network into this country. 

Applancer stipulated that India has currently at least 3,500 blockchain engineers in the public sector and 3,000 in the non-banking finance institutions. With the speculated 700% demand for blockchain developers, a looming shortage is expected. 

As Blockchain.News had earlier reported, the structural scarcity of talents is hindering the current blockchain industry. India is, therefore, expected to be a victim as the demand for blockchain developers significantly surpasses the supply. 

India’s Apex Court Postpones Cryptocurrencies Ban Hearing to November

The use of cryptocurrencies has different rules and regulations governing around them in different parts of the world. Many of the world’s governments are even avast to the use of cryptocurrencies for several reasons, amongst which are the privacy of transactions, the potential threat to the country’s own fiat currency relevance amongst others. India is one of a few countries that are blatantly against the use of cryptocurrencies.

Back in April 2018, the Reserve Bank of India released a press release prohibiting banks from providing financial services to individuals and corporate bodies dealing in cryptocurrencies. This move by the Reserve Bank of India has received many criticisms from several individuals and the High Court of Delhi as the ban clearly violates the constitution.

The Supreme Court has received petitions against this ban, and today, the 16th of October had a session on the ban. The hearing has been shifted to Nov. 19 from the initial date of Nov.12, giving a considerable allowance for India’s forthcoming public holidays.

There have been reports that the India government is collaborating with several agencies to ban cryptocurrencies and other digital currencies. The Reserve Bank of India claims a lack of knowledge about this move.

In today’s digital era of crypto-takeover, India is establishing itself as an unfriendly zone for the development of cryptocurrency and blockchain technology-related products and services.

The position of the India government, should it be reversed after the November hearing can help establish the global relevance of India in the growing blockchain and cryptocurrency ecosystem.

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Indian Engineering Students Develop Blockchain-based Smart Voting System

Three Computer Engineering Students, from Malla Reddy Engineering College for Women, have created a Blockchain-based Voting System which will allow votes to be casted online, instead of the manual means of standing in a poll line. The Hindu BusinessLine published this report on Oct. 21.

The news stated that the students were driven by an impetus to further foster democratic processes and eliminate voting challenges in urban areas.

“The poll percentages in rural areas are always higher than that of urban areas. Long queues at the polling stations is one of the reasons. Post winning the hackathon, we have been asked to test the solution in gated communities. It is very safe as it is backed by Blockchain technology. It is very difficult to break into this,” said Shivani, who was part of the winning team Yodha from Malla Reddy Engineering College for Women.

The report noted that Jayesh Ranjan, Principal Secretary (IT and Industries), asked the Yodha team to present their concept to the State Election Commission with the goal of testing the blockchain solution within gated communities.

On April 15, LongHash reported that West Virginia, a state in America, will use Voatz, the mobile blockchain voting startup, in the US 2020 Presidential election.

In this regards Donald Kersey, the elections director and deputy legal counsel in the West Virginia Secretary of State’s Office commented thus:

“Using the Blockchain system makes more sense for the security of all data than relying on one server. The Blockchain offers a safer system. There are dozens of nodes that record data. In addition, data is encrypted in ways that are almost impossible to solve. It is illogical not to use it. when there is a system like that.”

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India’s Tea Board Contemplates Using Blockchain to Stamp Out Tea Adulteration

Adulteration has been a menace in many sectors because the quality standard of a product is usually tarnished. Consumers are the primary victims of adulteration as they do not get value for their money. 

India’s Tea Board seeks to mitigate the problem of tea adulteration by using blockchain technology as this will enhance consumers’ experience, as well as preserve the reputation of the Indian tea. Moreover, the consumption of tea in this nation will be boosted through an improved experience.

India’s tea board seeks tea traceability

According to the Business Standard, the Tea Board intendsto commission, develop, and design technological innovations that will prompt the traceability of tea trade in the whole value chain. 

A consultancy firm is to be selected through tendering. It will be expected to study the existing technological advancements in the industry and make proposals, preferably mobile applications and blockchain technology, as they will be ideal in integrating the current systems. 

Blockchain is viewed as an exceptional solution because all supply chain details from the procurement of raw materials by manufacturers to the disposal of the final product through auctioning will be captured. 

This integration will be pivotal in enabling the end consumers to trace the origin of the Indian tea through strategies, such as digitization of the marketing channel.The urge for traceability was prompted by the increase in bad quality tea in the Indian market. 

The chairman of the Indian Tea Association, Vivek Goenka, noted:

“It is good for the industry if traceability can actually be implemented. Not only the consumers will be able to know the origin of the tea like from which garden and region, the adulteration of tea, if any, can also be tracked.”

Blockchain will assist in tackling the traceability challenge because it will capture data at every production stage. 

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Bithumb Touts Indian Alliances for its New Blockchain Protocol

Bithumb Global, one of the biggest cryptocurrency exchanges globally, has announced its intent of availing a new blockchain protocol in India. Dubbed ‘Bithumb Chain,’ the South Korea based exchange seeks to avail it to Indian startups, companies, and even the administration for developing products and services on the foundation of blockchain technology. 

Expressly, Bithumb Chain is a core infrastructure that connects many moving parts in a finance ecosystem. 

Vincent Poon, Bithumb Global’s vice president, ascertained that the company was open to any collaboration from India given that the nation has tremendous cryptocurrency and blockchain opportunities. He acknowledged that India has an impressive blockchain developer talent despite the country’s contentious issue of cryptocurrency legalization. 

Conversely, the firm’s managing director, Javier Sim, noted: “We are open to talking to regulators, working with them to be a regulated exchange. We are a strong brand from Korea and do not involve ourselves in unregulated or illegal trade.”

Sim also stipulated that Bithumb seeks to collaborate with Indian cryptocurrency companies that offer users peer-to-peer (P2P) transaction models with more inclination to trading cryptocurrencies on their platforms. Expressly, the P2P models employ networks that stimulate customers and cryptocurrency vendors to take part in trading sessions in absentia of banking alleys. 

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Indian Minister Reveals Crypto Regulatory Measures to Tame Terrorism

Terrorism has emerged to be one of the biggest predicaments across the globe. India is, therefore, not oblivious to this reality as it has revealed stringent measures intended at curbing this menace.

On Nov 8, at the “No Money for Terror” conference being held in Melbourne, Australia, G. Kishan Reddy, India’s Union Minister of State (MoS) for Home Affairs disclosed that the nation would incorporate the standards of the Paris-based Financial Action Task Force (FATF) to deter terrorism.

Expressly, FATF is an anti-terror finance watchdog that was established in 1989 to combat money laundering through liberal policies. It will, therefore, be used in taming terrorism by cutting off funding sources, especially cryptocurrencies. 

Reddy affirmed: “Virtual assets, especially cryptocurrencies, offer certain unique advantages to criminals because of their pseudonymous nature, encryption, global reach, and low-cost.”

He also added: “The government of India is fully committed to implementing FATF standards and establishing effective Anti-Money Laundering and Countering Financing of Terrorism regimes to dismantle and disrupt the terror-financing networks.”

India has been at the forefront of unraveling terrorist activities in the cyber world. Reddy stipulated that investigations had shown that the Islamic State, a terrorist organization, had utilized the Dark Web and encrypted platforms to recruit and radicalize members. 

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Indian Bill To Ban Cryptocurrency Excluded From Winter Parliament Agenda

The latest news indicates that the government of India will not be deliberating on the cryptocurrency bill during the winter session of parliament as was previously planned. On Nov. 14 2019, the Lok Sabha – India’s lower house of parliament – released the tentative list of bills which the government is expected to introduce and pass during the upcoming winter session.

While the “Personal Data Protection Bill” is included in the session agenda, the “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill 2019” is missing.  

Good News as Crypto Bill Delayed

India’s government has been considering the need for passing the crypto bill to ban cryptocurrencies in the country. In August 2019, the government told the country’s supreme court that the bill may be introduced in the winter session of parliament.

However, the lower house of India’s parliament published the agenda for the winter session that does not include the cryptocurrency bill. The winter session begins on 18th November and ends on 13th December.

The crypto community welcomes the delay of the cryptocurrency ban. The CEO of local cryptocurrency exchange Pockebits – Sohail Merchant – said that the draft bill to ban cryptocurrencies is not on the agenda for the parliament winter session.  

He considered this as a relief for now. But he emphasized that now it is time for the local crypto community to come together and present their case to the regulators.  

Also, Wazirx crypto exchange CEO – Nischal Shetty – regarded this as great news for the cryptocurrency ecosystem of India. He described the move by the India government not to include the draft bill to ban cryptocurrencies in the upcoming parliament session as great. He sees the India government as listening since they are not rushing to ban crypto in the country.

The Legislative Process   

The bill seeking to ban all digital currencies except state-owned cryptocurrencies was made by the IMC (Interministerial Committee) chaired by Subhash Chandra Garg – the Former Secretary of the Ministry of Economic Affairs. The bill was submitted to the Finance Ministry in February 2019 and made public in July.

Following the government’s intention to introduce this bill in the parliament’s winter session, the supreme court postponed the hearing of all petitions associated with the country’s cryptocurrency policies until January next year.  

India is among the five BRICS countries (Brazil, Russia, India, China, and South Africa) thinking to launch a new cryptocurrency to enable cross-border money transfer between the member nations.

Renewed Push for Community Unity

Since the cryptocurrency bill was made public, the crypto community in India has been actively campaigning for the government to reconsider the recommendations. The community emphasizes that the bill is flawed.

For example, Sohail Merchant – Pockebits CEO – urged all stakeholders within the crypto industry to forget emotions and competition, but to echo their thoughts with a single voice.

Earlier this month, several cryptocurrency stakeholders gathered at an event identified as “Unwind with Crypto”. The meeting aimed to bring all the important stakeholders within the crypto industry together and develop a stronger global community.

The pioneers of the blockchain and crypto industry attended the meeting. Among them include crypto Kannon’s Kashif Raza who mentioned that it is unfortunate that despite the utmost efforts of the crypto community, the Central Bank of India still appears confused concerning the widespread power of crypto assets.

Meanwhile, investors in the industry have widely criticized India’s potential to ban cryptocurrencies. In October 2019, Tim Draper – billionaire venture capitalist – called on Prime minster Narendra Modi to rethink the country’s hostile stance of cryptocurrency. He mentioned that India is leaving itself vulnerable by trying to ban cryptocurrencies.

A report shows that India risks facing loses of an estimated $12.9 billion if it bans cryptocurrencies.  

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India’s Telangana State to Stamp Out Fake Academic Certificates via Blockchain

Following concerns raised by the US Embassy that some employees and students were applying for visas using fake academic certificates, the Indian state of Telangana has made a broad move of addressing this menace through blockchain technology. 

Expressly, the state government has resolved to utilize blockchain for academic certificates granted by Jawaharlal Nehru Technological University Hyderabad (JNTUH). 

Rama Devi, a member of JNTUH’s IT Department, noted: “The US embassy pointed out that some students and employees applying for visas were submitting fake certificates. So we got feedback from the embassy to see if we could secure the certificates.”

Blockchain to make academic records immutable

Presently, the blockchain project will be tested on JNTUH’s software-engineering graduates before it is ultimately rolled out. 

The blockchain system integration has been praised as it will make the storage of academic records immutable or in other words, tamper-proof. Additionally, the distributed ledger technology will prompt decentralization, and this will be ideal in stamping out any fake academic certificates. 

The Telangana State has also revealed plans of incorporating blockchain into other universities.

Blockchain adoption in India has been steadfast based on its broad application when resolving challenges witnessed in different sectors.  As reported by Blockchain.News on Oct 30, India’s Tea Board seeks to mitigate the problem of tea adulteration by using blockchain technology as this will enhance consumers’ experience, as well as preserve the reputation of the Indian tea.

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