The Reserve Bank of India (RBI), which is the country’s central bank, has told its board of directors that it is in favor of imposing a complete ban on cryptocurrencies and said that a partial ban won’t be effective. The central bank has reiterated that it has some serious reservations when it comes to cryptocurrencies. Meanwhile, reports indicate that some additional changes are being made by the Indian government to the crypto bill. On Friday, the 592nd meeting of the Reserve Bank of India’s (RBI) central board of directors was conducted under the chairman Governor Shaktikanta Das. The central board is considered the central bank’s highest decision-making body.
The current domestic, as well as global economic situation, was taken into account by the board, along with the remedial measures and evolving challenges. Different aspects relating to cryptocurrency as well as central bank digital currency (CBDC) were also discussed by the directors. According to reports, the RBI said in the meeting that it wishes to ban cryptocurrencies in India because a partial ban would not work. A number of area of concerns related to cryptocurrencies were highlighted by senior RBI officials, which includes the tracking ability of crypto transactions, legal issues, extreme price volatility, valuation and identifying participants in transactions.
Governor Shaktinkanta Das also expressed his anti-crypto stance and said that cryptocurrencies are a major threat to any financial system because they are not regulated by any central banks. According to Das, the central bank has some prominent concerns about these digital currencies as they can pose serious threats to the financial and macroeconomic stability of India. The governor of the central bank had said in October that there was a need for having a lot deeper discussions regarding cryptocurrency because there were a number of issues that were part of the risks associated with these virtual currencies.
A bill by the name of ‘The Cryptocurrency and Regulation of Official Digital Currency 2021’ is scheduled for consideration in the winter session of the lower house of the Indian parliament, known as Lok Sabha. Even though there has been no official confirmation from the government, reports indicate that crypto assets in India would be regulated by the Securities and Exchange Board of India (SEBI), but crypto would not be allowed as a means of payment. But, additional reports suggest that the government is reworking the bill and it will instead be introduced in the budget session.
Meanwhile, a digital rupee is also under development by the Reserve Bank of India (RBI), which it is planning on introducing in phases. Last week, the central bank had announced that there would be two types of central bank digital currencies (CBDCs) that will be introduced; one retail and the other wholesale. T. Rabi Sankar, the Deputy Governor of the RBI, stated that they had already done a great deal of work on the wholesale-based CBDC, but retail was a lot more complicated. Therefore, it is expected to take some more time and they will release a pilot once it is ready.