The Reserve Bank of India has recommended the government formulate policies to keep a check on cryptocurrencies, Finance Minister Nirmala Sitharaman told the Parliament. And to further the RBI’s suggestion Sitharaman called for international collaboration if a ban on cryptocurrency is deemed fit, but without explicitly mentioning the government’s intent. Also Read - Top Cryptocurrency Prices on July 23: Bitcoin, Ether, Dogecoin, Shiba Inu witness drop
“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only after significant internal collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” Sitharaman said while addressing queries related to cryptocurrency at the Monsoon Session of the Parliament today. Also Read - Crypto price today: Bitcoin, Ethereum, Solana again in red after brief uptick
The finance minister said that the RBI wants to regulate, better yet ban, cryptocurrencies considering the debilitating effect they can have on a country’s monetary and fiscal economy. RBI has time and again expressed its disagreement with an economy that gives cryptocurrency an important role — nearly as equal to the cash-based mechanism. The government has been considering different aspects of cryptocurrencies and their effect on the economy. It even passed certain regulations for crypto-based transactions, but the crypto traders are living with the fear that a ban is impending. Also Read - Crypto prices today: Bitcoin, Ethereum rally up to 9 percent as market rebounds
While there is no regulation or bill in the offing, with the RBI constantly nudging the government, it will be a matter of time before more regulations, if not a ban, on cryptocurrencies will kick in.
Sitharaman, while answering a query about whether the RBI has issued instructions, circulars, directions, and warnings on transactions and circulations related to cryptocurrency, said, “RBI has been cautioning users, holders, and traders of virtual currencies (VCs) vide public notices on December 24, 2013, February 01, 2017, and December 05, 2017, that dealing in VCs is associated with potential economic, financial, operational, legal, and customer protection, and security related risks.”
“RBI mentioned that cryptocurrencies are not a currency because every modern currency needs to be issued by the Central Bank/ Government. Further, the value of fiat currencies is anchored by monetary policy and their status as legal tender, however, the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored, so it will have a de-stabilising effect on the monetary and fiscal stability of a country,” she said in the Lok Sabha.