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You are right that the entire blame for INR depreciation does not squarely sit on the shoulders of the RBI. It is a problem with reasons that go far beyond the
by ashray 13y ago
You are right that the entire blame for INR depreciation does not squarely sit on the shoulders of the RBI. It is a problem with reasons that go far beyond the control of the RBI.
Yes, there is a huge current account deficit (export/import imbalance) and that is a big part of it.
However, as the agency that manages the circulation and control of the currency, ultimately I look at the RBI as the 'face' of the Indian Rupee.
That said, the government doesn't have to trust bitcoin. However, regulatory burden in India is extremely high regardless of the kind of business you want to start. India ranks poorly on several 'Ease of doing Business' indexes. [1] I'm bringing this up since you mentioned the start up industry. It's just not that easy to start something in India.
Yes, tax evasion is a huge problem in India. But that's a cultural thing. The government has made it very hard to evade taxes (as long as you rely on existing banking channels) for now, but it doesn't really stop anyone. I can imagine that they are afraid that people will launder money by exchanging cash directly into bitcoin. However, why doesn't the government then go after the real estate business in India that normally takes 30%+ of the money in cash ? It is extremely hard to buy properties in resale unless you agree to pay a large percentage in cash. Oh wait, the government likes to put their black money into real estate.
For the same reason as Real Estate, I highly doubt that the Indian government will ban bitcoin or make it illegal. They have plenty of money they would like to sink into this new genius asset class. They might however make it harder for regular people to get into it.
Besides, you can always wire money to bitstamp and buy bitcoins as much as foreign exchange controls would let you.
[1] - http://www.doingbusiness.org/rankings http://www.doingbusiness.org/rankings
- vellasib 13y agoThe biggest concern they have is transactions which happen within Indian users. They will get absolutely no information about it. Although when finally someone realizes the money, it has to come to the bank, but taxes like Sales Tax/Service Tax (think chain of transactions), which are based on the transactions cannot be enforced.
- ashray 13y agoBut isn't that the same as selling something through OLX ? I suppose the issue with buysellbitco.in was that it was missing some paperwork that it should have had because they were accepting people's money (INR) and selling bitcoins on a commercial scale. I'm not sure why they said it violated foreign exchange acts though..
- sreevishwa 13y ago>But isn't that the same as selling something through OLX? Absolutely correct, which is why banning or restricting its transaction is not the solution. Bitcoin is equally anonymous as cash in this aspect.
- rikacomet 13y agothe statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA. As someone said above, money laundering is a big issue in India. On the financial side of things, it is very hard even for seasoned "hawala" operators to launder any money. Bitcoin is undoing that in Indian context, no matter how you see it. And the fact the silkroad used bitcoin, doesn't help things either.
- ashray 13y agothe statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA Where is this statement ? I only have: http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30247 http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?pr... Was there another statement from the RBI ?
- rikacomet 13y agoIts there "The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws. " anti-money laundering = FEMA, there is no law called AML, there are two laws: FEMA & PMLA. As per the investigation, the right clauses are applied.
- rikacomet 13y agovery good point. Yes, that is one of the big reasons, for RBI's stand. I have talked to someone in the recent past about their stand on bitcoin, and this was one of the main reasons. What it means, is that no doubt, bitcoin has many advantages, but at the end of the day, its a "change". All change must come at a pace, acceptable to the mainstream society.