India’s finance minister discloses RBI intends to prohibit crypto but welcomes global collaboration
India’s Finance Minister Nirmala Sitharaman said that the country’s central bank is pressing for a ban on cryptocurrencies but that global cooperation is required.
The Economic Times reported on July 18 that Sitharaman said the emphasis on international cooperation is intended to avoid “regulatory arbitrage.”
“By definition, cryptocurrencies are transnational, necessitating international cooperation to avoid regulatory arbitrage. Therefore, any law for regulation or prohibition can only be successful after extensive international collaboration in examining risks and benefits and establishing a common taxonomy and set of criteria, as stated by Sitharaman.
The Finance Minister also reaffirmed the Reserve Bank of India’s prior position that cryptocurrencies should be banned because they undermine the nation’s financial stability.
Because a central bank does not produce cryptocurrencies, Sitharaman has ruled out the possibility of their use as a currency, citing problems such as speculation.
Moreover, the value of fiat currencies is supported by monetary policy and their legal tender status. “However, the value of cryptocurrencies is based exclusively on unfounded assumptions and hopes of large profits,” she stated.
At the Monsoon Session of parliament, when it was widely believed that the government would present a measure on crypto legislation, the Minister aired her views. There have been no indications that such a law will be submitted.
Narendra Modi, the prime minister of India, first raised the necessity for global collaboration on crypto regulation. According to Finbold, Modi thinks that no government could independently manage cryptocurrencies since they provide a challenge to investors and warns that Bitcoin (BTC) poses a danger to future generations.
India’s crypto regulatory uncertainty
Even though India is home to many crypto investors, the government’s stance on digital assets remains unclear. A contentious categorization issue is whether the assets are financial assets or commodities.
However, the country may get some certainty after the government completes work on a consultation document involving digital assets.
In the lack of clear rules, the government has recently issued sector-specific recommendations. For example, the nation imposed a 30% tax on bitcoin earnings.