Facebook’s Libra Coin May Not Be Launched In India, Facebook’s Biggest Market
This week, the world stopped and gasped at the announcement of Facebook’s Libra, the cryptocurrency created by the company and set to be launched next year.
However, it seems that the biggest market for Facebook will not be available during the launch next year, according to a new report made by the Economic Times (ET). India, one of the most important markets for Facebook, does not permit any bank to support companies that use the blockchain for financial transactions.
This means that the digital wallet that will be created by the company, Calibra, will not be available in the country. This is mostly because of the so-called crypto ban, which was enacted by the country’s central bank back in 2018.
At the moment of this report, the Reserve Bank of India (RBI) has not filed any kind of application with the Reserve Bank of India despite the promises of the company that the new cryptocurrency would be rolled out “globally”.
There is even a bill that is set to restrict and forbid all kind of crypto trading and that suggests a 10-year jail term for the people who insist on using cryptos.
The Libra Foundation, the organization responsible for creating and managing the virtual currency, is comprised of 28 companies, including Uber, Visa, Paypal and Mastercard.
According to the official announcement, the tokens will be available for both Facebook and Whatsapp and the Libra coin will be used as a stablecoin, the kind of cryptocurrency that has a stable price.
Libra Is Unlikely To Be Approved In India
While peer-to-peer (P2P) transactions are currently allowed in India, the local regulator banned all kinds of transactions which are intermediated by companies, which is what Facebook would do.
Some experts in the Indian regulation affirmed that the law does not discriminate between digital assets that interacted with other fiat currencies or not. Because of this, the system could only work legally if Facebook created Libra to be a fully closed system that could only transact within its own network.
If the token is not engaged with any external economy, according to Anirudh Rastogi, the founder of Ikigai Law, it should be fine. This does not seem to be the case, though, which can end up creating problems for the cryptocurrency.
Most of the concerns of the bank are related to tax evasion and money laundering, so not even the argument that this is a stablecoin is set to actually work very well. As Calibra is also set to allow the conversion with local currencies, the problem continues.
Another important problem might be that Facebook and the Libra Association would have to make sure that the token is not used in any kind of illegal transaction or criminal activity, as the local laws understand it as the responsibility of the company to make its clients comply with the law.
Facebook already had a WhatsApp payments project in India, which would not use the blockchain, but the unified payments interface (UPI) instead. This project was also not highlighted by the local regulators.
With 400 WhatsApp users and 300 million Facebook users in the country, Facebook certainly will lose an important market if the company is not able to solve this issue.
Other nations in which the project will not be operational include Cuba, Egypt and China, all countries which have already banned Facebook.