The Reserve Bank of India (RBI) has initiated a request to the Central government regarding the formulation of crypto regulations and to exercise a ban on them. To this, Finance Minister Nirmala Sitharaman remarked saying the RBI crypto ban plea would only be thought about if it garners “global collaboration” to ensure optimum and effective implementation of crypto regulations and prohibition. This petition was made mainly for regulating or banning private cryptocurrencies in the nation.
In written feedback to a query raised by the Lok Sabha, Sitharaman mentioned that:
“In view of the concerns expressed by the RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited.”
She added that the global reach and impact of cryptocurrencies call for the fact that the global go-ahead is necessary. This is because it will deter any possible discrepancies in the crypto framework passed. To explain this further she said:
“Therefore any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”
The RBI crypto ban petition is another Indian move that might affect the crypto domain’s work just like imposing taxes on it did. Moreover, the finance minister’s statement amid brewing speculations of a crypto framework bill to be passed in Parliament’s Monsoon Session is an occurrence to note. However, the surprising fact is that there is no listing for the introduction of any such bill.
On the other hand, RBI itself is planning to launch its native digital currency this year. According to a statement by RBI Deputy Governor T Rabi Sankar, private cryptocurrencies would cease to exist after the introduction of Central Bank Digital Currencies (CBDC).
Currently, the public is awaiting a crypto consultation paper that the government is still working on and this has lowered the hype for the above-mentioned crypto bill. This paper is formulated to provide an overview of the government’s opinion on the cryptocurrency domain. Earlier, in late May, the government said that it was “almost ready” but it has not been unveiled to date. However, all these topics have indeed taken a side seat when the RBI ban on crypto plea was initiated.
The Central bank of India has repeatedly expressed its dissatisfaction with the working of the crypto and blockchain domain. Therefore, it has made several recommendations to the government to facilitate the regulations on crypto. However, the Central regulatory body is still not sure if these virtual assets can be considered financial assets or should they be placed in any other category as of commodities. To this, both the PM and FM of India, Narendra Modi and Sitharaman, expressed the need for international collaboration to formulate a better framework.
Further, in response to RBI’s suggestion, Sitharaman mentioned a possible issue stating:
“The value of fiat currencies is anchored by monetary policy and their status as legal tender. However, the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored.”
Whether the RBI crypto ban petition will become a reality or not still cannot be ascertained. However, global inputs are expected to change the course of it in the near future.