- Date : 19/07/2022
- Read: 3 mins
RBI seeks to ban cryptocurrencies!
The RBI, India’s Central bank, has recommended the Indian government ban cryptocurrencies. The RBI has said that the asset class has a destabilizing effect on the monetary and fiscal policy of India. In view of this, the RBI has recommended banning the asset class and framing legislation to control the asset class. The RBI wants a complete ban on cryptocurrencies, per the statement from the Finance Minister in the parliament on 18th July 2022.
But Nirmala Sitharaman, India’s Finance Minister, has said in the parliament that any regulation on cryptocurrencies requires cross-border support, as the asset class has a borderless nature. She said that any ban on cryptocurrencies could be successful only if significant international collaboration is done on the asset class's risks and benefits and the taxation structure analysis. Only if Global collaboration is done the asset class can be banned.
Speculations are rife that the government could regulate the cryptocurrency sector in the monsoon session of the parliament, which started on Monday, 18th July. But no bill has been listed for introduction till now. The government is also expected to write a crypto consultation paper, which is expected to outline the government’s stand on the asset class. The paper was supposed to come out in May, but it is still awaited.
The Indian government has not declared their stand on the asset class and whether it comes under the ambit of financial assets or is a commodity asset. The Finance Minister and the Prime Minister have asked for joint global action on the cryptocurrency regulation.
As of now, there is no regulation on cryptocurrencies. The global coordination is lacking in intent as well. In the meantime, the RBI is working on its digital currency. The digital currency is expected to be launched by the end of 2022. As per the comments made by the deputy governor of the RBI, T Rabi Sankar, the Central Bank Digital Currencies (CBDC) could mean the end of reasons for the existence of private cryptocurrencies. As per the comments, he means that the digital currencies by the central banks globally can completely replace the need for private cryptocurrencies.
The global collaboration on the control of cryptocurrencies is lacking. The RBI wants to ban cryptocurrencies and has recommended the same to the Indian government. But as per the comments by the Finance Minister of India, banning cryptocurrencies require global collaboration. As of now, there is no global regulation to ban cryptocurrencies. The CBDCs or the Central Bank Digital Currencies are expected to replace the need for private cryptocurrencies. The RBI is expected to launch its CBDC by the end of 2022.
Read this expert article by Gopal Gidwani on Should India ban or regulate cryptocurrencies?