MUMBAI: The Reserve Bank of India (RBI) on Thursday shared one bit of good news and another piece of bad news. For one, the central bank has finally decided to mint its own crypto currency, a la bitcoin. The proposed digital currency can be used like any physical currency. “These are issued by the central bank and are considered the liability of RBI. They will be in circulation in addition to the paper currency that we have. It also holds the promise of reducing the cost of printing notes,” said B P Kanungo, deputy governor, RBI, without disclosing the timeframe by when it will be a reality.
An interdepartmental committee has been set up and a report on the feasibility of a fiat digital currency will be submitted by June. Importantly, the committee will study if digital currencies backed by global central banks can be used as legal tender and if so, how they should be issued and regulated. The bad news is, the banking regulator has barred banks and financial entities it regulates from providing services to any individual or businesses dealing in cryptocurrencies.
This spells death knell for all service providers offering the blockchain-backed digital currency, which the regulator believes ‘adversely impacts market integrity and may endanger financial stability’. Entities operating with virtual currencies have no regulatory approval, registration or authorisation, the central bank said.
Three months to come clean on cryptocurrencies
The RBI has given all regulated entities three months to unwind their positions with the entities related to crypto currencies
RBI may allow regulated foreign digital currencies
The RBI panel will also study if digital currencies backed by global central banks can be used as a legal tender in India and if so, how they should be issued and regulated