The Reserve Bank of India (RBI) supports restrictions on the cryptocurrency sector, Finance Minister Nirmala Sitharaman told Parliament on Monday. Calling for global support on crypto regulations, Sitharaman said that the RBI is concerned that the participation of cryptocurrencies in India’s existing financial systems could have a destabilizing effect on the country’s monetary and financial stability. This development comes at a time when tax laws related to virtual digital assets have come into force in India, reducing trade volumes on Indian exchanges.
According to Sitharaman, a ban on the crypto sector is not viable if other countries do not support and execute a similar decision.
“RBI is of the view that cryptocurrencies should be banned. The RBI has expressed concern over the adverse impact of cryptocurrencies on the Indian economy. RBI mentioned that cryptocurrency is not a currency as every modern currency needs to be issued by a central bank or government,” Sitharaman said in a written statement submitted to the Lok Sabha.
Earlier this month, the Internet and Mobile Association of India (IAMAI) decided to curtail a four-year-old crypto advocacy group called the Blockchain and Crypto Assets Council (BACC). After four years of nurturing the Council, IAMAI realized that it should devote its time and resources to other emerging technology areas that make more immediate additions to India’s digital journey.
At this point, India is still waiting for laws on the crypto sector.
As part of her response in the lower house, Sitharaman said that cryptocurrencies, by definition, are borderless and require international cooperation to prevent regulatory arbitrage.
As part of her response, Sitharaman said, “Therefore, any legislation for regulation or restriction can be effective only after assessment of risks and benefits and significant international cooperation on the development of common classifications and standards.”
Sitharaman is currently overseeing the drafting of crypto regulations in India, which are likely to be discussed in the monsoon or winter session of Parliament.
Meanwhile, India can also look at crypto laws being framed by other countries for a global perspective.
Recently, the US and UK opened channels for their citizens to submit their opinions and suggestions on the types of crypto laws that will help the emerging industry grow, without disrupting the existing financial systems.
No such provision has been introduced by the Government of India so far.
Back in March, the Organization for Economic Co-operation and Development (OECD) drafted rules instructing global tax institutions on how to share crypto-related data between each other. This regulatory framework aims to merge cryptocurrencies with international tax reporting networks.
A formal document called the Crypto-Asset Reporting Framework (CARF) has been published by the international policy-making organization outlining its proposals.
In fact, just this month, the Financial Stability Board constituted by members of parliamentarians, treasury officials and central bankers from the Group of 20 economies, including India, said it would bring in global regulations for cryptocurrencies by October this year.