RBI to ban crypto, wants global backing to regulate it: India FM

Nirmala Sitharaman, Minister of Finance of the Indian Union, declared that the Reserve Bank of India (RBI) has expressed concern over the destabilizing effects of crypto on the country’s fiscal stability.

In this regard, RBI is of the view that cryptocurrency should be banned. The Indian government looks forward to “global collaboration” if such a ban is indeed implied, Sitharaman added.

The statement circulated on social media, with notable financial experts reposting the document.

While answering a series of crypto-related questions posed by MP Thirumaavalavan Thol at the Lok Sabha on July 18, Sitharaman announced that RBI is of the view that crypto should be banned.

She further pointed out that cryptocurrencies are “borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any regulatory or prohibition legislation can only be effective after significant international collaboration on the subject. assessment of risks and benefits and the evolution of common taxonomy and standards.

Additionally, Sitharaman stated RBI mentioned that cryptocurrencies are not real currencies, as modern currency can only be issued by central banks or governments.

Additionally, the value of fiat currencies is anchored by monetary policy and their status as legal tender. But the value of cryptocurrencies is based solely on speculation and expectations of high returns that are not well anchored.

This comment was a bombshell for the crypto industry as the government’s crypto consultation paper is awaited. India’s crypto community, which has over 100 million investors, has speculated that the government may introduce a legislative framework to regulate the crypto sector during the monsoon parliamentary session. However, no such bill has yet been listed for introduction.

The government has so far declined to announce its position on crypto, citing a lack of clarity surrounding its classification, whether it is a financial asset or a commodity. Meanwhile, Finance Minister Sitharaman and Prime Minister Modi have called for joint global action to address the issues generated by the use of crypto.

India has already imposed a strict tax regime on earnings from virtual assets. The 30% tax rate on all cryptocurrencies without any exemptions or deductions in the Union budget has been implicit since April 1, 2022.

In the latest addition, any buyer of the virtual assets will have to pay 1% TDS and possible inclusion in the GST range from July 1, 2022. This has heavily impacted trading volumes on crypto exchanges in the country.