Facebook has not filed an application with the Reserve Bank of India (RBI) for its soon-to-be-launched cryptocurrency, Libra. Also, the virtual asset will be unavailable in the South Asian country because India’s current regulations prohibit the use of banking network for cryptocurrency transactions, reports Economic Times on June 21, 2019.
Libra Will Not be Available in India Due to Regulations
Per the report, Facebook’s cryptocurrency will not available in India because the social media company has not filed an application with the RBI for Libra. There could also be a potential block on the digital currency because India’s current regulations disallow the use of a banking network to carry out cryptocurrency transactions.
In the same vein, sources close to the matter revealed that Calibra, the digital wallet for Libra will not be used in countries where cryptocurrency has been banned or Facebook’s operation has been restricted. The latter goes contrary to the comment of a Facebook representative who said Libra will work on WhatsApp and be used globally.
400 Million WhatsApp Users in India May be Unable to Access Libra
That being the case, a block in India could stop 400 million WhatsApp users in India from accessing and using the digital asset. Despite this, peer-to-peer transactions with the use of cryptocurrencies can still be carried out in the country.
India in April 2018 had, however, restricted companies it regulates from associating with cryptocurrencies while citing risks such as money laundering, tax evasion, and fraud. Nevertheless, companies are contesting the ban in a Supreme Court and another hearing has been scheduled for July 23, 2019.
Facebook is Legally Obligated to Prevent the Use of Libra in India
Salman Waris, managing partner at TechLegis Advocates & Solicitors revealed that India’s IT Act could prohibit an entity from dealing with Libra. As such, anyone found wanting may face penalties. Waris also said Section 79 of the Indian IT Act obligates Facebook to ensure that Libra is not used for illegal activities which include the virtual asset’s use in India. “Section 79 would apply to Facebook even though it is based out of India. Section 75 of the IT Act also gives extraterritorial jurisdiction to the law,” he added.
On the other hand, Anirudh Rastogi, founder of Ikigai Law, a law firm noted that the Indian regulations do not discriminate between virtual assets that operate as a closed or open system within a network. For instance, if Libra was to be offered within the Facebook platform, then the RBI would’ve had no issues since it does not engage with the external economy. However, given that Libra will also be dealing with fiat currencies, it will not bypass the scrutiny of the government.
Prior to this time, news had begun to circulate of a draft bill, “Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019” which will prevent the trade and storage of cryptocurrency in India. Anyone found trading the virtual asset could procure a 10-year jail term.