9th December 2021 > > India.

tl;dr

India is sending out mixed signals about various banning options, which will not succeed.

Market Snap

Market Wrap

BTC is struggling to maintain the psychologically important level of $50k.

Occasional Series – Political satire of the highest order

Sir Philip Barton, with an annual salary of £185,000 and a pension pot currently valued at £1.7mm, is the most senior mandarin at the Foreign Office, enjoying the title of Permanent Secretary.

The most important task that the Foreign Office has had for decades was the evacuation of Afghan nationals from Kabul to the UK as the Taliban bore down on the capital with murderous intent. As we are all too painfully aware, the UK fell far short of what could have been done, on Barton’s watch.

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Appearing in front of a select committee this week, Barton was grilled on his departure for holiday just before the fall of Kabul, an event that had by then been widely signposted, and frankly came as no surprise to anyone with even a passing interest in the news.

A key focus for the committee was his extraordinary decision to not return from that holiday until 26th August, some 11 days after Kabul had been lost to these racist and misogynistic terrorists.

For any right-minded individual this disastrous dereliction of duty – leading to the death and maiming of individuals who deserved the protection of the UK - could only result in instant dismissal with no further benefits, and retraction of his ennoblement.

Wary of that outcome, Barton attempted to justify his negligence by claiming that his presence at work would have had no impact on the number of people safely evacuated from Kabul.

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Let’s get this straight.

Barton’s defence against the charge of negligence rightly laid at his door is that he is so incompetent that even if he was at work, he would have had no positive impact on his single most important task ever.

If this had been used as a ficticious plot line in "The Thick of It" it would have been dismissed as too absurd for broadcast.

Curious Cryptos’ Commentary – The futility of a crypto ban

India has recently announced its desire to go down the route of trying to ban cryptos.

The situation remains unclear, but there is this statement from the Reserve Bank of India contained in a new legislative bill currently under discussion:

"To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses."

The intent seems quite clear – the only room for blockchain technology will be in the promotion of a Central Bank Digital Currency (CBDC) which we all know has nothing in common with cryptos.

At a stroke, the central bank is trying to deny all the technological innovations and efficiency gains available from this ongoing revolution to the population of India. That is not a stance that can be maintained for any reasonable time.

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The waters are muddied somewhat by reports out of the Securities and Exchange Board of India (SEBI) which appear to suggest that retail investors can still buy and sell cryptos if they are stored on a centralised exchange regulated by SEBI.

This is an interesting proposition in one respect, and completely unachievable in another.

The interesting part is the idea of regulating crypto spot exchanges. That is not the case in the US, UK, or Europe, jurisdictions in which spot foreign exchange is not regulated.

It would be a relatively simple matter to insist that centralised exchanges are registered and regulated in each country in which they operate. I think it would be a trivial task to distinguish cryptos from physical currencies, and any disputes would be at the margins and immaterially irrelevant to the overall market.

In particular, the policies and processes that lead to exchanges listing new coins could certainly do with a greater degree of transparency and consistency, not least to combat the front running opportunities allowed by the current lack of regulations.

So, full marks to the SEBI for this part of the proposal. It should be considered by other countries.

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The unachievable bit is the insistence on only storing cryptos on a centralised exchange.

That is impossible to monitor and enforce. Private wallets are not linked to individuals, interactions with decentralised finance (DeFi) are not linked to individuals, and it is not possible to stop the transfer of cryptos from one public address to another in exchange for goods and services supplied in the real world.

Legislators are once again failing to understand the power of cryptos. They are wishing for a simpler world that they can control, one which simply does not exist.

Reserve Treasury Protocols (before they all go to zero