RBI Governor Shaktikanta Das says Crypto a “Serious Concern”
At the Business Standard’s BFSI summit the RBI governor expressed “serious concern” over cryptocurrencies and their threats to India’s Macroeconomy and financial stability. This has been a long-held stance by the Reserve Bank of India and Mr. Das’s views were just repeating RBI’s concerns. He also questioned the levels of crypto adoption in India. He was quoted saying, “The number of investors I have is that I'm not so sure about the numbers which are being quoted.”
From 2013 onwards the RBI has held a stance against crypto and had a negative view on them. The RBI went as far as issuing a circular discouraging the use of cryptocurrencies and banning banks from providing any related services in 2018. Even though this was overturned by the apex court in March 2020, RBI still has very tight rules and regulations on cryptocurrencies.
There are many reasons why the RBI and crypto skeptics have expressed distrust of virtual currency.One of the major reasons is cryptocurrencies history with security breaches. For example the hundreds of thousands of bitcoin stolen from Mt Gox causing it to close it’s shutters.
Another major reason is the cryptocurrencies extreme volatility. They are subjected to a range of factors like geopolitical developments,spikes in adoption of cryptocurrencies and regulation changes.
Finally the RBI fears crypto’s anonymity, as the identities of traders are concealed which poses a serious threat to financial institutions monitoring money flow and laundering.
Banning of Cryptocurrencies Unlikely as MPs, Industry Experts and Associations informed Parliament Express Strong Views in Parliament
In the first ever meeting on cryptocurrencies by the Parliamentary Standing Committee on Finance on Monday, Members of Parliament, Industry experts and associations informed the committee that crypto can’t be banned and the next step should be to find ways to regulate them.
The panel led by Jayant Sinha discussed the current state of crypto in India. As of now there is a cloud of uncertainty over crypto in India but the panel meeting in Parliament has given the general public an idea where things are headed on this matter.
It has been made clear that cryptocurrencies will be regulated, however it is still a question of how it will be regulated. The panel discussed who will regulate cryptocurrencies. The experts felt that the body that regulates crypto should be appointed by the government and ideas of RBI regulating crypto was also suggested.
A bill on cryptocurrencies also doesn't seem far away as in the meeting, it has been discussed that the Government is looking to introduce a new crypto bill in the first week of the winter session of Parliament. The government had previously had planned to introduce a crypto bill during the union budget but has since scrapped it as a new bill was being drawn up (for the first week of winter session as mentioned earlier). This bill will focus on providing greater protection to investors.
The panel also discussed the matter of advertisement. Cryptocurrencies have been promoted as a way to make quick money by exchange platforms and the Parliament believed that these parliaments lacked transparency and were over promising.
Finally, the Reserve Bank of India is still not convinced over the matter of Cryptocurrencies, expressing skepticism towards the numbers presented by exchange platforms and continues to voice it’s opinion on cryptocurrencies' threat to India’s macroeconomy.
Prime Minister Warns Nation’s Youth to Be Cautious with Cryptos
Prime Minister Narendra Modion Thursday, November 19th, expressed strong concerns and warnings against the use of cryptocurrencies, at the Sydney Dialogue, a forum hosted by the Australian Strategic Policy Institute. This comes as the central government intends to regulate and restrict the liberty of cryptocurrencies in India.
At the forum, the PM stated, when asked about cryptocurrencies, “It is important that all democratic nations work together on this and ensure it does not end up in the wrong hands, which can spoil our youths.”
Written By: Rajat Pujar
Edited By: Ronojoy Borpujari