Reserve Bank of India wants virtual currency ban, government needs global support, says FM
The Indian government supports global cooperation if there is a need to ban or regulate digital assets, including Cryptocurrencyeven with the Reserve Bank India She has made her position on these assets clear, Minister of Finance Nirmala Sitharaman He said Monday, July 18. She was responding to a question written in Parliament about cryptocurrency by MP Thirumah Valavan Thule that day.
Thule asked the finance minister if the central bank had issued instructions, circulars, directives, warnings or anything else regarding the issuance, buying, selling, holding and trading of cryptocurrencies in India in the past 10 years. “The RBI warns users, holders and dealers of Virtual Currency (VCs) via public notices on December 24, 2013, February 1, 2017, and December 5, 2017 that dealing in VCs is associated with economic, financial, operational, legal, customer protection and security related risks. The Reserve Bank of India (RBI) also issued RBI) also issued a circular on April 6, 2018 prohibiting regulated entities from dealing in virtual currencies (VCs) or providing services to facilitate any person or entity’s dealing with or settlement of venture capital currencies,” Sitharaman replied.
“Cryptocurrencies are by definition limitless and require international cooperation to prevent regulatory arbitrage. Therefore, any legislation to regulate or ban can only be effective after significant international cooperation on risk-benefit assessment, classification evolution, and common criteria.”
The Reserve Bank has repeatedly warned about the macroeconomic effects of cryptocurrencies, pointing to its problems while questioning its fundamental fundamentals. The central bank governor even described cryptocurrencies as a “real risk” in the annual report of the Reserve Bank of India. Sitharaman told Parliament’s monsoon session that the Reserve Bank of India recommended framing legislation on cryptocurrencies and opined that they should be banned.
“This is in light of the concerns expressed by the Reserve Bank of India regarding the destabilizing effect of cryptocurrency on the monetary and financial stability of a country,” Sitharaman said.
It also said that in the circular issued on May 31, the Reserve Bank of India required its regulated entities to carry out cryptocurrency-related operations, including Know Your Customer (KYC), Anti-Money Laundering (AML), and Counter-Terrorist Financing (CFT) obligations under the Act. Prevention of Money Laundering (PMLA) 2002. It also required to ensure compliance with relevant provisions under the Foreign Exchange Management Act (FEMA) for foreign remittances.
Speaking about Sitharaman’s comments, Edul Patel, CEO and co-founder of Mudrext said, “RBI’s position on cryptocurrency has always been rigid. But the crypto space could give way to many innovations across the sector in the next few years. For such an industry to grow. And it contributes to the vision of Digital India, the government should not ban it but can instead set guidelines for the sector. If the government decides to reject it, it will affect a large section of stakeholders. India is at the forefront of this growing ecosystem.”
The Finance Minister’s call for “global cooperation” on regulating or banning cryptocurrency could be interpreted as the Indian government may prefer to frame laws around cryptocurrency alongside other countries, rather than creating a jurisdiction-specific law which may not be an effective solution, commented Rishi. Anand, partner at DSK Legal.
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