Sorry the global crude oil prices are soaring, thanks to sanctions on India's major oil supplier(Iran). Major world economies are in a state of war since the whole past decade. None of these are under RBI or Government of India's control.
Yes there is corruption, but we are equal partners to that.
In case you haven't noticed bulk of India's import business depends on software. There is massive anti-outsourcing wave, and at the same Indian start up industry hasn't really compensated for that.
There is every reason why the government can be skeptical Bitcoin in India. We have massive tax evasion situation prevalent here. This is not a anti-technology anti-capitalism stance the government is having here. The public cheats on taxes so often, the government has 0 reasons why it should trust some thing new like Bitcoin.
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.
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..
Absolutely correct, which is why banning or restricting its transaction is not the solution. Bitcoin is equally anonymous as cash in this aspect.
And the fact the silkroad used bitcoin, doesn't help things either.
the statement issues by RBI earlier, said that anyone who would be found to be dealing in bitcoin, would be considered violating FEMA
Was there another statement from the RBI ?
"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.
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.
Only and only thing makes a currency depreciate in its value, and that is increasing the money supply by the Central bank. Even if the currency is being dumped by a foreign nation which purchased it in past, it still is merely a delayed loss of value being visible.
Plus what the hell does the war in the past decade have to do with inflation of last year. Indian rupee was in low 40s, and now it has gone to high 60s, only and only the entity which is allowed to issue Indian rupee is responsible for it(measuring it in dollars is just an expression, I can measure it in kgs of wheat too and it will be the same problem).
They want to give Bitcoin the same treatment which they gave to PayPal that is, make it unusable.
Eh? A currency's exchange rate cannot be merely "regulated" by a central bank. Even in some parallel world in which it could, what makes you think that a depreciating currency (vis a vis, say, the USD) is always bad and an appreciating one always good?
A couple of days after the Reserve Bank of India issued an advisory to public not to indulge in buying-selling of Bitcoins, the first raid in India was undertaken in Ahmedabad by Enforcement Directorate (ED) on an entity that provide platform to trade in this illegal but virtual currency.
I'm 100% certain that the website in question however was in violation of several KYC and AML norms as well as money exchange regulations, so the fact that they shut it down does make sense.
It is sad more-so because the regulatory framework is extremely opaque and if I were to start a bitcoin business in India, I wouldn't know where to begin...
The RBI has done a shitty job so far of regulating the Indian Rupee. I'm an Indian and my personal savings are now worth 30% less since 2009 on a global level (USD->INR went from Rs. 43 to a dollar to Rs. 62 now..). Internal inflation is at 10% YOY and there's no practical way to protect your money. Of course, I'm not implying that bitcoin is the solution to all these issues, just saying that on a personal level I do have issues with the way the RBI has managed (mismanaged?) our currency.
[1] - http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?pr...