Indian Prime Minister Narendra Modi has warned of the risks bitcoin poses to young people, likely as his government prepares to introduce legislation to regulate cryptocurrencies. Several countries have begun to legislate to monitor cryptocurrencies, and exchanges in many jurisdictions are now subject to the same regulations as other financial service providers. In India, more and more voices are calling for a new ban, but Modi’s government seems to prefer strict regulation, which could be adopted by the end of the year.
“It is important that all democratic nations work together on this topic (cryptocurrencies) and make sure it doesn’t get into the wrong hands, which could corrupt our young people,” he said in an online cybersecurity forum, organized by the Australian Strategic Political Institute.
President Modi also used his speech to extol India’s merits as a global technology center. His “Digital India” project aims to modernize and exploit technology in the subcontinent, which has 1.3 billion people. Modi, elected to a Hindu nationalist party, has often been accused by human rights groups of using technology to silence opponents.
Shaktikanta Das, director of Reserve Bank of India, said last week that cryptocurrencies pose a serious threat to the financial system if not properly regulated. The central bank is considering issuing its own official digital currency (CBDC).
The arguments that cryptocurrency critics use are that unregulated, largely anonymous transfers make them a perfect tool for drug traffickers, migrant smugglers, or money launderers.
India banned cryptocurrency transactions in 2018, before that ban was overturned by the country’s highest court two years later, leading to a boom in the industry. Today, more than 100 million Indians use virtual currencies, placing the country fourth behind the United States, Russia and Nigeria in terms of users, according to a report published last month through the investment portal BrokerChooser.
However, from our pages we have repeatedly reminded that financial crimes are easier to commit with cash, because it is not traceable. The movement of value remains visible in blockchain, which does not make it the preferred tool for this type of activity. Cryptocurrencies are a tool, and as such its use depends on who uses it. In fact, some large and famous commercial banks, which should be champions of regulation, have been implicated in the biggest financial scandals.
