Monday, December 4, 2023

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“Banning cryptocurrency is perhaps the most advisable choice open to India,” says RBI

On Thursday, the Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar expressed his concerns over digital assets and cryptocurrencies. He said that banning cryptocurrency is perhaps the most advisable choice open to India.

Questing the intensions of these digital currencies and their circulation he said, “We have seen that crypto-technology is underpinned by a philosophy to evade Govt controls. Cryptocurrencies have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution.”

The crypto investors and traders already faced a setback during the recent budget session when Finance Minister Nirmala Sitharaman announced that, a ‘30% tax on private cryptocurrencies and non-fungible tokens will be imposed along with 1% additional TDS (tax deducted at source).

However, Deputy Governor Sankar also clarified through his statement, “We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated & found that none of them stands up to basic scrutiny.”

Earlier, RBI Governor, Shaktikanta Das also made a similar remark on cryptocurrencies. Das reiterated that these virtual currencies are unstable and difficult to track, it poses a big threat to the country’s financial and macroeconomic stability.

In his statement to the press, he said, “As far as cryptocurrencies are concerned, the RBI stance is very clear. Private cryptocurrencies are a big threat to our financial and macroeconomic stability. They will undermine RBI’s ability to deal with issues related to financial stability.”

Further reinstating, he said, “I think it is my duty to tell investors that when they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset) not even a tulip.”

Meanwhile, there is still no clarity on the Central Bank Digital Currency (CBDC), the digital currency which RBI will be releasing in the near future. “Work on Central Bank Digital Currency is ongoing. Once the law, as proposed, is amended, we can go ahead with our proofs of concept and pilot projects,” Sankar said.

This cold response towards the digital asset by RBI has again put the crypto investors in a tight spot. Earlier when the tax slabs were introduced, the Co-founder of CoinDCX Sumit Gupta took on Twitter and asked for tax reduction on crypto citing this move will “discourage the traders.”

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