Cryptocurrencies haven’t been favored within the Indian regulatory landscape. This has left questionmarks on Libra. According to anonymous sources, Facebook has not submitted any application with the RBI (Reserve Bank of India) for its cryptocurrency in India. Other sources claim Calibra may be excluded from markets where cryptocurrencies are banned.
Currently, peer-to-peer cryptocurrency transactions are allowed in India. Earlier this year, the RBI placed a ban on certain corporate entities from dealing in digital currencies. This was due to the possible financial and social risks associated with them. Although, the ban is being contested in the Supreme Court.
Facebook subsidiary, Calibra, was created as a platform for financial services involving Libra in Facebook’s ecosystem. But, Libra intends to decentralize in time. It’s still unclear how the Indian government will see this approach.
Irrespective of the court’s decision, the difference between personal and business is not certain to Tanvi Ratna, a policy analyst at New America, he believes: “If the government brands it criminal activity then obviously Facebook is knowingly committing an offence” no matter how Libra is used.
It is strongly believed within India’s government that cryptocurrencies enable tax evasion, money laundering, and fraud. Libra is currently tagged as a fiat currency and may face challenges. This is because India’s laws does not discriminate between digital assets operating in isolation within a network, and digital assets interacting with fiat currency such as the rupee.
According to Anirudh Rastogi, founder of Ikigai Law, if Facebook designs Libra as a closed system, only to be transacted on its network and not beyond, then RBI would be less concerned because the coin wouldn’t engage with the external economy. But, if it operates in an open system, then it concerns RBI.