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The Reserve Bank of India is reportedly planning to forbid cryptocurrencies from its financial structure due to concerns about the destabilizing effect these virtual assets may have on the nation's economic prosperity.
India's Finance Minister Nirmala Sitharaman stated that it is essential to have legislative measures in cryptocurrencies because they tend to be seamless, and without collective action from international waters, there can be speculative trading. As a result, any regulation or prohibition will be effective only if there is strong global cooperation to properly assess the risks and benefits.
While India's decision to tax cryptocurrency transactions and earnings earlier this year was interpreted as the Indian central bank endorsing the budding technology, the banking institutions have sent conflicting signals to industry participants in recent months.
Sources claimed that this could primarily be due to the Reserve Bank pushing commercial banks from engaging with such platforms, making accessibility to the country a chaotic experience for the crypto companies.
At a banking conference, T. Rabi Sankar, the Deputy Governor of the Reserve Bank of India (RBI) stated that cryptocurrencies are deliberately intended to override the tightly controlled financial system and are not conducive to definition as an asset, or currency. He added that they have no underlying cash flows, no inherent value and that they are akin to, if not worse than, Ponzi schemes.
It is worth noting that the Reserve Bank of India has issued warnings to users, owners, and traders of cryptocurrencies since December 2013.
It has also notified its regulated units to continue conducting customer due diligence practices for virtual currency money transfers as per the guidelines laid out for Know Your Customer (KYC), Combating Financing of Terrorism (CFT), Anti-Money Laundering (AML), and other relevant clauses.
Considering the recent ambiguity, many crypto firms have left the country, while an increasing number of local entrepreneurs are building for overseas audiences rather than serving the world's second-largest internet market.
Source credits:
https://techcrunch.com/2022/07/18/indias-central-bank-wants-to-ban-cryptocurrencies/
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