Crypto Rupee : Elephant in the Room ?

 

 

Dear Smt Sitharamanji,

A million thanks for announcing in your Budget speech, introduction of CBDC ( Central Bank Digital Currency )

As our PM said yesterday : “….digital rupee will revolutionise the fintech sector.. will also lead to ease in development of global digital payment systems.. “

Of course, learning from the lessons learned from our past attempt at DE-MONETIZATION, it is only natural that you avoided spelling out the LONG TERM STRATEGY right now – and in one fell swoop !

However, those who might have failed to “ Read between the lines “ , may want to continue reading

With regards,

Hemen Parekh / hcp@RcruitGuru.com / 03 Feb 2022

 

 

Context :

Investors queue up for cryptos after tax proposal   /  03  Feb  2022

 

Extract :

 

 

 

User sign-ups on crypto platforms jumped 30-50% on finances day Tuesday, when the finance minister introduced a proposal to tax digital property.

While crypto investors and exchanges appeared for the high quality print within the proposal, some seen the announcement as an oblique strategy to endorse crypto trade in India.

 

In a post-budget press convention, nevertheless, finance minister Nirmala Sitharaman clarified that ,

#  “ taxing does not automatically bring legitimacy.”

#   It can’t be stated {that a} ban or not of crypto-currency is off the desk, as consultations are nonetheless

     on going, she stated.

Overall, it’s a positive move for the industry,” stated Nischal Shetty, chief  of WazirX, which noticed a greater than 50% bounce in sign-ups from a day earlier. “The tax clarity is a welcome move,” he stated.

“It is a huge relief to see that our government is adopting the progressive stance of going ahead in the direction of innovation,” stated Shetty of WazirX.

 

 “The negative impact in this case is not immediate as people have some time to respond to it,” stated Sathvik Vishwanath, cofounder of Unocoin.

 

Those people looking for some clarification, got it directly from PM yesterday when he addressed BJP workers

Digital currency can be exchanged for cash, says PM Narendra Modi   /  Business Standard  / 02 Feb 2022

Extract :

"The digital rupee will be the digital form of our physical rupee and will regulated by the RBI. This will be such a system that will enable exchange of physical currency with digital currency," Modi said at the virtual symposium that was attended by chief ministers of BJP-ruled states and party workers across the country.

"Central Bank Digital Currency (CBDC) will strengthen the digital economy... If anyone makes a payment in digital currency, you will be able to change it to cash," he said.

Modi said the launch of CBDC will make digital payments and online transfer of funds more secure and risk free.

"This will also lead to ease in development of global digital payment systems," he said.

He said the digital rupee will revolutionise the fintech sector by creating new opportunities and lessen the burden in handling, printing, logistics management of cash.

===================================================

MY TAKE :

At this stage ( pending debate on that Consultation Paper and release of Regulatory Framework by RBI ), there is a lot of confusion. All kinds of experts are voicing all kinds of “ interpretations “ of what might be THE LONG TERM strategy of the government

Could that ( no doubt, VERY long term ) strategy could be as described in my following e-mail ?

Crypto : Corruption : Corona : China……………………… [ 17 June 2020 ]

 

Extract :

Consider, the POSITIVE aspects of a Crypto-Currency , if it were to be :

 Ø  Backed and regulated by Government of India / RBI

 Ø  The ONLY crypto-currency of India ( no other  “ private minting “ by anyone )

 Ø  Totally replaces CASH [ paper currency notes ] from our economy ( full

     digitization ),

 

Will China Reign Supreme ?   …………………………………………..[ 15 Oct 2019 ]

Elephant Bonds vs Dragon Bonds …………………………………….[ 04 Nov 2019 ]

 

Then, when I read the following news, I felt elated :

 

India’s Draft National Strategy On Blockchain Calls For Official Cryptocurrency[28/01/2020 ]

 

And sent following email to Cabinet Ministers :

Time to Un-Block the Blockchain Technology  …………………..[ 30 Jan 2020 ]

 

 

What will convince RBI / Government to issue OFFICIAL VIRTUAL CURRENCY ?

Here is a brief ( non-comprehensive ) suggestion for proposed Law :

 

     Ø  While banning Private Crypto, introduce IndiaBit ( Govt Virtual Currency )

Ø  With some effective date , withdraw all Paper Currency ( forget coins )

 

     Ø  Minimum denomination will still be called a RUPEE ( easy to convert from

         paper to digital )

 

     Ø  As of a date , bank balances in everyone’s bank account gets converted

         to IndiaBits

     Ø  Set time limit within which people can deposit their paper currency into banks

         for instant conversion into IndiaBits

         

     Ø  After set date, paper currencies held by anyone ( individual or any legal entity

         such as a Company ), loses all value and become illegal for any sell / purchase

         transaction

         

     Ø  All future financial transactions ( sell / buy of any goods or services ) can only

         be through mobile-app based DIGITAL transactions

         

     Ø  Since all transactions will become DIGITAL , Govt would have full / life-

         time LOG of each citizen’s “ Sale or  Purchase “

         [ Who bought What , When , from Whom , at What price , Where etc ] .

     Ø  Here is why automatic compilation of such CONSUMPTION DATA for the entire

         economy, will be a GAME CHANGER :

        

     Economic data will help policy    

 

Dear Smt Nirmala Sitharamanji / Shri RaviShankar Prasadji / Shri Piyush Goyalji,

 

I have no clue as to what mechanism could be used ( Inter-Currency Exchange

 Rate ) for payment for Imports and remittances for Exports , if – and when – we

 introduce IndiaBit

  

But if IndiaBit can ,

 

#  To begin with bring out all BLACK MONEY ( stashed away as paper currency

      notes )

      and 

     deploy the same into mainstream economy for productive purposes ,

     and

  

#  Put a Full Stop to any future generation of Black Money ,

 

      then my proposal deserves a debate

 

 

===================================================

  PS :

Apropos PM’s clarification, can CASH ( fiat currency ) be changed to “ Digital Rupee “ ?

If someone takes to her bank, Rs 5 LAKH in cash ( Rs 2000 notes ), will bank change it into “ Digital Rupee “ , ( provided credited into her bank account ),  by deducting 30 % as transaction TAX ? 

 

If yes, all hoarders of BLACK MONEY ( in cash ), would happily convert into WHITE MONEY by paying 30 % !

A kind of AMNESTY SCHEME ? – even if limited to such “ change / conversion “ taking place before March 2024

A nice way to bring lakhs of crores of hidden / unaccounted / tax-evaded CASH into productive use ! 

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Related Reading:

In   Sweden,  technology  is   close   to   making   cash   a   thing   of   the   past.   All   aboard   with   the   cash-less   society ?   

Extract :

From 2010 to 2020 the proportion of Swedes using cash has fallen from 39 to 9 per cent, according to Sweden’s central bank, the Riksbank.

To meet the changing needs of an increasingly cashless society, the Riksbank is piloting a digital currency – the E-krona – a so-called central bank digital currency, or CBDC.

One aim of this pilot project is to protect the Swedish krona against the rise of decentralised cryptocurrencies.

===================================

Added  on  10 June 2022 :

Launch of Central Bank Digital Currency within FY23, but gradually: RBI