BENGALURU: Finance Minister Nirmala Sitharaman on Monday said the Reserve Bank of India (RBI) has asked the government to frame regulations for cryptocurrencies, considering their destabilising effect of them on the monetary and fiscal stability of a country. Addressing queries in the Lok Sabha on Monday, she said any legislation for regulation or banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.
“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage.” She further said the central bank is of the view that cryptocurrencies should be prohibited. The RBI, which has time and again pointed out various issues pertaining to digital assets, has also registered its concern over the adverse effect of cryptocurrency on the Indian economy. It says that cryptocurrencies are not a currency as every modern currency needs to be issued by the central bank or the government.
RBI Governor Shaktikanta Das called cryptocurrency a “clear danger” in the foreword to the 25th issue of the Financial Stability Report (FSR). The Internet and Mobile Association of India (IAMAI) has also dissolved the Blockchain and Crypto Assets Council (BACC), which represents crypto exchanges in the country. The FM had many times mentioned distinguishing crypto assets from cryptocurrencies. The government prefers using the term asset for crypto. The RBI is concerned about the “currency” aspect of the crypto technology, said Mohammed Roshan, Co-founder of GoSats.
Edul Patel, CEO and Co-Founder, of Murex, a global crypto investment platform, says that the RBI’s stance on cryptocurrencies has always been rigid since its inception. “But, the statement of FM on worldwide collaboration on regulating cryptos may indicate that the government may regulate it rather than ban it. It seems to be a progressive approach if the finance ministry honours the global accommodative stance,” he said.
No single nation can formulate policies on behalf of everyone. Instead of calling for an outright ban on crypto assets, Dileep Seinberg of MuffinPay said that governments should initiate dialogues with all relevant parties. “Cryptocurrency or blockchain is undoubtedly a global phenomenon, and the industry employs thousands of people. The industry is currently worth a trillion dollars, and is expected to grow rapidly in the coming years,” Seinberg said.