Union Finance Minister Nirmala Sitharaman on Monday said that the Reserve Bank of India (RBI) is in favor of banning cryptocurrencies.
In a written reply presented on the first day of Parliament’s monsoon session, Sitharaman said the central bank has expressed concern over the destabilizing effect of cryptocurrencies on monetary and fiscal stability in order to recommend legislation.
In her written statement, Sitharaman said that cryptocurrencies are borderless and international cooperation is needed to prevent regulatory arbitrage. And therefore, any law for regulation or restriction can take effect only after significant international cooperation on the assessment of risks and benefits and the development of common classifications and standards.
RBI has registered its concern over the adverse impact of cryptocurrency on the economy and mentioned that cryptocurrencies are not currency as every modern currency must be issued by a central bank or government, the statement read.
Furthermore, the value of fiat currencies is anchored by monetary policy and their status as legal tender, however, the value of cryptocurrencies depends entirely on speculation and expectations of high returns which are not anchored well, Hence it will have a stabilizing effect on the monetary and fiscal stability of a country, Sitharaman also said while listing the impact of crypto on the economy.
Thirumavalavan Thol, a member of parliament for Chidambaram, had asked the finance minister questions about cryptocurrencies in parliament.
He had asked, “Whether RBI has registered its concerns on the adverse impact of cryptocurrency on the Indian economy and if so, the details thereof; whether RBI has