Open reply to 'Open Letter' for Finance minister Shri Nirmala Sitaraman

Minister and bureaucrats does not have time to reply to open letter. Therefore, I took liberty to answer fellow Crypto enthusiast.

Open Letter: Click here

Disclaimer: Views shared here are personal backed by few years of experience working closely with the government. It is genuine attempt to reply to Open letter respecting, individuals point of view. The intention of reply was to throw some light on other side of coin with blunt thoughts. Hope you enjoy and agree to counter points mentioned here.

Dear Sumit,

Thank you for taking time to share your thoughts! We acknowledge “intent of cryptocurrency sector is not the threaten the currency system,” but long term impact on monetary policy, central banks or fiat currency cannot be overlooked in case of cryptocurrency.

Can you provide us data to back your claim because our research says otherwise?

Word – “cryptocurrency” is self explanatory of what it envisions – "being money" therefore monetary policy and central banks will anyway be impacted. You claims are more of rhetoric than empirical.

Your goals of creating crypto-economy are well noted. It would be great if you can explain how crypto-economy shall function in parallel with tradition economy – neither there is price stability, nor does it fit the purpose of money. We do not see much value - apart from it being a “unaccountable foreign instrument of speculation.”

What benefits to India’s traditional economy you talking about? Please quantify.

For participation in global financial system – dollar serves the purpose well. India is protectionist economy, not liberal. We firmly believe, increased investment, job creation and economic growth should be facilitated by FDI - accountable money rather then - crypto currency - which is proven to be tax haven for people. Flipside, crypto acceptance will move more money out of India rather than facilitating investment in India. Neither have me mined crypto currency nor hold substantial amount to facilitate inflow.

We are equally excited about Blockchain but you need to understand that Blockchain can function and thrive without crypto currency. Therefore, investment in blockchain space is acknowledged and clearly not relevant to arguments put forward with cryptocurrency. Its like, accept dark web because, internet it good. You need to build ration argument, with logical consistency.

FYI, Crypto currency innovation encompasses lot more than creating exchanges. Please name startups from India that have created something around crypto currency apart from wallets and exchanges out of India. Not even single BIP (Bitcoin Improvement Proposal) or patents application have come out of India.

Are you sure, you are talking about innovation?

Revatilizing traditional industries like agriculture can also be done through UPI’s, please take time to read case study of M-Peas, crypto currency is one of option to financial inclusion. For a minute, lets accept your argument and, imagine farmer accepting crypto currency, maybe Bitcoin and next day realizing that value of their saving has tumbled 30% in a day. Who is going to be responsible for his vanishing wealth?

You can afford, but citizens that are in need of financial inclusion needs promise of “store of value.” Period. Can crypto currency provide that?

Smart contract, supply chain models and other claimed innovation that can connect to farmers to metropolitan markets can be seamless implemented on blockchain without the need of crypto currency.Are we right? Correct us bureaucrats, if we are wrong. We do understand little it of technology.

Value proposition of crypto currency as claim to convenient, secure and transparent payments is not different from UPI. We are processing billions of transactions per month at nominal or no cost. Who cares about other payment system? Do you care about M-Pesa? You should evangelize that too - convenient, secure and transparent payments. I'd like to remind you that crypto currency fundamental purpose is un-traceability, self ownership, limited number of crypto and something that cannot be seized by government. Let me put in simple way, who else knows about your cold wallet apart from you?

Developed nations like USA and China have their own criteria of recognizing things and that necessarily should not be adapted in India. Do you wish India to be copy-paste of USA or China? We are defintely open to investing in crypto currency related research. Please do send us problem statement of research that you believe should be done in crypto currency space, and how crypto currency community is taking if forward.

We are excited to read technical information, patent drafts, whitepaper and other technical knowledge created by that participants of crypto currency. Hope you have document that here and there. That is predecessor to innovation. For case of Blockchain innovation, we have founded Centre of Excellence based out of Bangalore, you should visit and see work being done there.

We agree, impact of crypto currency on the life of ordinary person is underrated – there are more than 1.5 million customers scammed in name of crypto currency- mining contracts, ICO’s and illegal wallet companies running away with customer money. Imagine India being scammed with 50,000 crores in name of crypto. That's a silent reality. We do care about the impact of crypto currency in life of ordinary people therefor, we are here today. Banks not permiting crypto business and activies. Again gentle reminder - there is no resistance from banks and governments on blockchain activity. That said, we do not consider crypto as ideal or sustainable tool to increase the spending power of ordinary citizens.

Crypto currency as an asset class is definitely exciting to us. How much taxes did you pay us on appreciation of your crypto currency (assset) portfolio in last few years? Please, don’t tell us that, you do not have any crypto holdings. Or there are no taxation guidelines for crypto currency appreciation. Is you say then, allow us to laugh. You could have filed taxes by mentioning gains from “Other sources.” Oh! You do not even care about taxes or fact that participants of exchanges, trades or, miners have filed any taxes or not. Did you even identify or report single SAR to anyone?

"The effect this will have on India’s unbanked is difficult to overestimate as cryptocurrencies could give these people access to money management services such as savings and lending for the first time." – rise above from propaganda and think yourself. Who are under-banked? Why these under banked citizens are under banked? What is problem statement to them? What is value proposition of crypto? Does cryptocurrency solves the pain point of underbanks? What are risks? Is investment in speculative asset their priority or holding on to few thousands of rupees more important? We can give you 20 more questions to think for persona of under banked people. What we are trying to convinence is - don’t every, never take any statement/propaganda as face value. Think of claims, assess carefully from user point of view and then choose evangelism. Be student of IIT - scrutinize. This is in fact my humble request to every youth. Moving forward,

Work to define activities in crypto-currency is ongoing and under progress. But, there is genuine concern about impact of mining on planet earth - It is found that Bitcoin uses an estimated 61.76 terawatt-hours (TWh) of electricity per year - more than many countries and approximately 0.28% of total global electricity consumption. More than what Switzerland consumes.

Should we still promote something that damages the planet?

We would recommend you to continue with blockchain research, development and innovation and keep posted about FDIs, fund raising and other success stories in blockchain domain. Keep it different from crypto currency. Crypto currency is not Blockchain. Crypto currency are complex subject that impacts multitude of domains like – financial stability, deficits, national security, terrorist funding, tax evasion therefore, decision making will take time. Thank you for taking time to write letter.

Look forward to processing your patents application and, reading research papers on crypto currency subject (not blockchain) as leaders are innovators. Meanwhile, keep innovation in Blockchain!

Sincerely,

Anonymous

(On behalf of Government)