RBI wants cryptocurrencies banned, Nirmala Sitharaman tells Parliament
By Team Newsable | First Published Jul 18, 2022, 6:12 PM ISTShe stated that the RBI has expressed worry about the negative impact of cryptocurrencies on the Indian economy. According to the RBI, cryptocurrencies are not a currency because every contemporary currency must be issued by the central bank or the government.
Finance Minister Nirmala Sitharaman stated on Monday that the RBI has voiced worries about cryptocurrencies, stating that they should be restricted because they might destabilise monetary and fiscal stability.
"Given the RBI's worries about the destabilising influence of cryptocurrencies on a country's monetary and fiscal stability, the RBI has suggested that legislation on this subject be drafted. The RBI believes that cryptocurrencies should be banned," she stated this in a written response to the Lok Sabha.
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She stated that the RBI has expressed worry about the negative impact of cryptocurrencies on the Indian economy. According to the RBI, cryptocurrencies are not a currency because every contemporary currency must be issued by the central bank or the government.
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Furthermore, she stated that the value of fiat currencies is anchored by monetary policy and their status as legal tender, whereas the value of cryptocurrencies is solely based on speculation and expectations of high returns, which are not well anchored, and thus has a destabilising effect on a country's monetary and fiscal stability. Cryptocurrencies are transnational by definition, necessitating international coordination to prevent regulatory arbitrage.
Since 2013, the Reserve Bank of India (RBI) has issued frequent warnings to users, holders, and dealers of Virtual Currencies (VCs) that trading in VCs is linked with possible economic, financial, operational, legal, customer protection, and security concerns.
On April 6, 2018, it also issued a circular forbidding its regulated firms from dealing in VCs or providing services to assist any person or organisation in dealing with or settling VCs. On March 4, 2020, the Supreme Court dismissed the circular.
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Furthermore, the RBI advised its regulated entities on May 31, 2021 to continue carrying out customer due diligence processes for VC transactions in accordance with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT), obligations under the Prevention of Money Laundering Act, and so on.
(WIth PTI inputs)
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