Facebook might not launch its virtual currency named Libra in India, due to restrictions on the usage of digital currency in the country. The social networking giant has not approached the Reserve Bank of India (RBI) for permission to launch the currency in the Indian market.
RBI has barred cryptocurrency in India citing reasons such as growing threat to the economy with the increase in fraudulent activities, money laundering and and tax evasion.
Adding legal understanding to RBI's restrictions on crypto currencies, experts have said that a forceful introduction of crypto in the Indian market will lead to multiple penalties on Facebook. "Under Section 79 of the Indian IT Act, Facebook is obligated to take 'all due care' to ensure its network or platform is not used for illegal activities like dealing in cryptocurrencies 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," said Salman Waris, managing partner at TechLegis Advocates & Solicitors, according to the Economic Times.
As per legal permits, only peer-to-peer transactions of Bitcoins are allowed. Facebook's crypto is not designed to be a closed system and is meant for transactions in the external economy, which concerns RBI.
However, the permission for peer-to-peer transaction of cryptocurrency has created a loophole for Facebook. The social network is planning to take advantage of the loophole by using WhatsApp as a platform to launch Calibra.
Calibra is a subsidiary of Facebook that aims to provide financial services and help its users access and participate in the Libra network. Facebook plans to use Calibra for real-time conversion of local currency. Facebook has partnered with 28 financial service corporations that include Visa, Mastercard, PayU and Uber to accept the digital currency linking it to Facebook Messenger and WhatsApp
The social network is currently working on its payments business in India. The company has been trying hard since 2018 to run a fully operational payments business in the country.