#149 Turning And Turning In The Widening Gyre

India Policy Watch: Crypto And Samvidhaan&#160;<br/><br/>Insights on burning policy issues in India<br/><br/>&#8212; RSJ<br/><br/>When you write a weekly newsletter you view every news item as possible content for the next edition. You shoehorn some framework or stretch things to draw a historical parallel with that event. Trust me, it can be tiring - speaking for me, not for Pranay who has frameworks for his breakfast with poha. But as I sometimes like to say, there are weeks when content presents itself on a platter with a side of masala papad. This is one of those weeks.<br/><br/>First, there was news that the government plans to table the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the winter session of the Parliament. It is likely the government will impose strict regulations that might fall short of an outright ban on them. Separately, there are indications that the bill will have a framework for creating a digital Rupee to be issued by RBI, the equivalent of a central bank digital currency (CBDC). We have written about crypto and CBDC in previous editions (<a href="https://publicpolicy.substack.com/p/111-tu-tu-main-main-in-the-information">here</a> and <a href="https://publicpolicy.substack.com/p/122-naya-paisa-purana-qissa-">here</a>) through the lens of public policy and economics. As Satoshi wrote in his essay:<br/><br/>&#8220;The root problem with conventional currency is all the trust that&#8217;s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.&#8221;&#160;<br/><br/>That digital currencies will reduce transaction costs, be more efficient as a payment method, and can have all kinds of interesting decentralisation use