On 2013’s Christmas Eve, RBI (Reserve Bank of India) issued a notice to caution Indians about security, legal and financial risks related to cryptocurrencies. That came nearly four years after the first virtual coin, Bitcoin, emerged in the financial marketplace.
The Reserve Bank of India has been skeptical about crypto since long ago. On 2013’s Christmas Eve, the financial institution warned Indian about risks related to cryptocurrency involvement, highlighting online security and legal facets. That was four years after the Satoshis introduced Bitcoin.
The central bank’s negative stance on crypto seems to strengthen eight years later. The Reserve Bank of India stated that the crypto market required a blanket ban since partial restrictions will not work. Remember, RBI banned cryptocurrency trading in the country in 2018, ordering banks to avoid crypto undertakings. However, a 2020 Supreme Court ruling alleviated the order by the Indian central bank.
The RBI has resisted digital coins consistently, citing financial stability concerns. Allowing crypto in the nation will render the bank’s fiscal policy less effective. Moreover, virtual currencies would undermine regulated entities and banks. Other issues related to cryptocurrencies include massive price volatility and challenges in tracing transactions.
Besides that, RBI sources urge that controlling risks related to foreign exchange would be challenging as money inflows would be through digital coins and not dollars. Gita Gopinath, an IMF chief economist, also pointed out these challenges, stating that developing and emerging nations encounter a massive threat. Meanwhile, Mumbai’s Mint Road believes the crypto is not an asset nor a currency due to potential illegal activities with the asset class.
The Indian government has not concluded its view on digital coins as all wings remain not in sync with the issue. That resulted in the proposed bill, postponed until the upcoming Parliament session. Fintech experts believe some government members might be against a blacked ban on cryptocurrencies. Keep in mind that such a move can see the country cut off globally, categorized with China, which suspended crypto in 2021.
Legal experts stated that the market requires a comprehensive regulation, and watchdogs should not compare India’s crypto policy to developed nations like the UK. These experts believe a complete ban isn’t an approach for now.