Crypto Currencies

Is India required to allow Crypto Currencies? What might be the reasons for RBI to enforce Restrictions on Crypto Currencies in India?

While Banning Crypto Currencies may not be the sole solution, they surely needs to be regulated, if Government chooses to allow them, and RBI has to take the additional responsibility, in addition to handling Indian Rupee (the Fiat Currency of the Land).

Crypto Currencies can be created by anyone who can run the Software (Existing Open Source Solutions / Proprietary Solution) on a Server, and who may present their Vision on their website, while announcing the Initial Coin Offerings (ICO).

On other hand, Crypto Exchanges can be run by anyone, who has a software that can track Chosen Crypto Currencies & Fiat Currencies, unless RBI would have had approved previously running Crypto Currency Exchanges, before they are restricted to operate in India last year.

Some Questions to consider before thinking to allow Crypto Currencies include:

  1. While Forex Markets with <300 Currencies is not easier to deal with, for anyone/everyone, how can an individual/a small organization handle the Vision/Crypto Currency, so that the people who buy those crypto currencies donot lose after holding them for a certain no. of years?
  2. Maintaining a Company is Different while handling a Currency and it’s dynamics (in the context of Volatile Forex Market) is different, isn’t it?
  3. In Fiat Currencies, the Value of a Currency depends on Socio-Political Situation of the Country, Trade happening in that Currency and Value of that Currency that is held by Regulators of Different Countries & other Forex Traders. How about this with Crypto Currency and How the Value of Crypto-Currencies be determined, other than through Speculation?
  4. While Crypto Currency may be used as a Wallet, like Air Miles, when the holder choose to Convert the Crypto Currency back to a Fiat Currency, how can one determine the rate at which the conversion has to happen?
  5. With Self generating nature of Crypto Currency, it being inspired from Fiat Currency creation of a Politically/Geographically restricted Size of a Land, what will be the upper limit of value of new currency value that can be generated in a particular period of time (a financial year for example) with any given Crypto Currency?
  6. With Cross Border Nature of Crypto Currencies, which Country’s Financial Regulator will regulate them or how much possibility exists for Collaboration and Consensus of Decisions between Different Financial Regulators?
  7. How can Crypto Currencies be controlled to prevent them as Vehicles of Money Laundering, with Money Laundering rampant when we have <300 Fiat Currencies (all depending upon Financial Policies of Different Countries)?
  8. How can Crypto Currencies be controlled to prevent them as Vehicles of Terrorist Financing, wherein the anti-social elements/extremists potentially hold the possibility of converting the Crypto Currency they hold, to Fiat Currency whenever liquidity is required?
  9. Last but not least, how can Crypto Currencies handle Right to be Forgotten Clause of EU GDPR, beyond the requirement of 7 Years Financial Data Holding period?

A Note on some of the money laundering possibilities include:

  1. Money earned for a cause, might be taxable in a country, in which case, Crypto Currency might be used, as part of Cross Border Transaction Scheme, to evade tax
  2. Money earned for a cause, that is illegal in a country, might be transacted using Crypto Currency and that illegally earnings might be converted into a Fiat Currency of their choice, in a later time, into their choicest Fiat Currency?


While the underlying Blockchain Technology (Distributed Ledger Technology) might be useful for some specific purposes, despite it’s prevailing issues (Example: Scalability), Crypto Currencies potentially create Fragmentation in Forex Market, allowing anyone and everyone to Create a Crypto Currency, irrespective of their Capability to maintain it, while allowing it to be exchanged back into Fiat Currencies, and surely it’s not good for the Financial Eco-System of any Country.

Governments & corresponding Financial Regulators might choose to Allow & Regulate Crypto Currencies, only after understanding the limitations in regulating them, and with a clear view of what kinds of impact it may have on people of it’s Country.

These are my personal views about Crypto Currencies and this article is a compilation of my thoughts, those that are presented about Why Indian Government & RBI chose to put prevailing Restrictions, in a FIAKS Group Discussion.

P.S. This article was originally posted by me, on Linkedin Pulse on January 23, 2020. This is my Second Article on regulating Crypto Currencies topic, my previous article can be found at This article can be found at,