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India needs to recognize blockchain separately from digital currencies: ex-finance secretary

Subhash Chandra Garg has continued to be a vocal proponent of the greater adoption of blockchain technology. The former finance secretary said it is about time India moves on from its strong opposition to digital assets and promotes more adoption of the underlying blockchain technology. 

Garg made the statement in a recent exclusive interview where he spoke at length about his thoughts on India’s approach to blockchain technology. He highlighted that so far, the government’s focus has been on stopping the adoption of digital assets. 

The action is justified, Garg said. This is because digital assets pose a significant threat to India’s sovereignty as they are being marketed as alternative currencies without any issuer or controller. 

“Blockchain was always seen as something innovative, but it is so deeply masked with the asset or the (crypto) currency side of it that it has been difficult so far to separate the technological innovation,” he said.

However, India cannot continue to only focus on just digital assets. The underlying blockchain technology, in his opinion, is the future. Therefore, more should be done to encourage its adoption.

“My sense is that this [blockchain] is the future… This will change the world. India has unfortunately taken a more muddled and difficult kind of position, which will hurt its arrival, its mainstreaming. But it will arrive in time,” Garg added. 

Despite his stance, Garg is opposed to the outright banning of digital assets. In another interview with the Financial Express, he stated that a ban on the sector would not benefit plans to increase the adoption of blockchain technology. Instead, he called for adequate regulations while dialogue continued with digital assets firms. 

India keen on blockchain adoption while restricting digital assets through regulation

Garg’s comments are coming on the back of the government consolidating its digital assets and blockchain approach. In recent months, the regulatory approach of the central government and the Reserve Bank of India (RBI) has come into alignment as they are all working on introducing regulations for the industry. 

The ministry of finance has introduced a taxation regime for digital assets, while the RBI has followed up with policy recommendations for digital asset regulations and the introduction of a CBDC. 

In the same vein, the government and the RBI have also been exploring use cases for blockchain technology focused on E-Governance. The RBI has partnered with leading financial institutions to pilot a block-based trade financing platform, while the central government has entered a trade agreement with the United Arab Emirates (UAE) to share knowledge on blockchain technology.

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