By
Steve Muchoki
April 23rd, 2024
Indian authorities are discussing the proposal to set up state-cryptocurrency ‘Lakshmi’ based on blockchain technology and backed by the Reserve Bank of India (RBI).
According to Sunday’s report of Business Standard, the Indian government is considering the official launch of its own cryptocurrency based on blockchain technology similar to bitcoin.
The proposed cryptocurrency is to be issued and backed by Indian central bank. A committee of government officials has reportedly discussed the project of state-based cryptocurrency and found the idea of running a blockchain for financial services useful:
“The proposal was discussed by a committee of government officials…Whenever the decision is taken, the cryptocurrency will fall in the domain of the Reserve Bank of India (RBI) and some Acts such as the Currency Act might have to be amended. Hence, this will be a time-consuming process.”
Although Indian government officials support the idea of running blockchain technologies, they are still not comfortable with Bitcoin, considering it unreliable. So, the main idea of the proposal is to set up a new government-issued cryptocurrency as an alternative to Indian rupee. The new currency will be named “Lakshmi” after the Hindu goddess of wealth, fortune and prosperity.
As Sudarshan Sen, the Executive Director of the Reserve Bank of India stated in his speech:
“Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely.”
The Indian government is also working on designing a legal framework for bitcoin and other digital currencies. As Money Control has recently reported last week, “the government is going to prepare a framework for bitcoin soon.” The investigation of bitcoin has started by a governmentally accepted committee in April 2017. As a result the committee advised strict monitoring of cryptocurrencies as no immediate restriction is possible, but the government is still not ready to promote non-fiat money.
Earlier this year the Reserve Bank of India issued a warning to all Indian bitcoin holders about the risk relating to Bitcoin transactions. A bit later Indian authorities were about to apply Know Your Customers (KYC) norms to make the transactions safer. However, that idea didn’t succeed as it would lead to legitimizing bitcoins in the country.
Although the Indian government is in search of putting bitcoin and other cryptocurrencies under control, a total ban remains highly unlikely. According to the words of Arun Jaitley, Indian finance minister and the country’s foremost financial official, the last few years have demonstrated a significant growth of India’s bitcoin market, which made investors curious on where and how to invest in bitcoin in India. The most popular bitcoin exchanges in India are Zebpay, Unocoin, Bitxoxo and Coinbase.