In a recent statement, Reserve Bank of India (RBI) Governor Shaktikanta Das reiterated the central bank’s firm stance on cryptocurrencies, emphasizing the significant risks associated with digital currencies, especially for emerging economies. Despite the growing acceptance of cryptocurrencies in various countries, Das remains steadfast in the RBI’s position on the matter.
RBI’s Stand on Cryptocurrencies: Das affirmed, “Our position, my position, and the RBI’s position on this (cryptocurrencies) remains unchanged irrespective of who does what.” He emphasized that venturing into the cryptocurrency realm poses substantial risks for both emerging and advanced economies. The comments come in response to the recent approval by the US SEC of the first listed exchange-traded funds for tracking bitcoin.
Cryptos as a Threat to India’s Stability: Governor Das has previously labeled cryptocurrencies as a threat to India’s macroeconomic stability and has advocated for an outright ban on virtual digital assets (VDAs). He has equated crypto trading with gambling and expressed concerns that private cryptocurrencies could be a potential trigger for the next financial crisis.
Central Bank Digital Currency (CBDC) and e-rupee: Discussing India’s central bank digital currency, e-rupee, Das mentioned plans to initiate pilots for new segments in the wholesale space. The RBI is actively working on the ‘programmability’ of the e-rupee to facilitate cash transfers, especially for direct benefit transfers to farmers.
AI Lending and UPI Adoption: Governor Das highlighted the RBI’s exploration of model-based artificial intelligence lending by financial entities. Additionally, he emphasized ongoing discussions between the RBI and the National Payments Council of India (NPCI) with several countries to expand the adoption of the unified payments interface (UPI) for cross-border transactions. Das praised UPI as one of the best payment systems globally and dismissed concerns of NPCI being a monopoly, emphasizing UPI’s potential for further growth.
Global Regulatory Framework and Indian Government’s Stance: The RBI Governor’s remarks align with the Indian government’s proactive stance on advocating for a global regulatory framework for crypto assets. Finance Minister Nirmala Sitharaman has actively supported such regulation, and Prime Minister Narendra Modi has also called for a global framework to regulate cryptocurrencies. The government has implemented a stringent taxation regime on crypto transactions, including a 30% tax on gains and a separate TDS for transactions exceeding INR 10,000. Crypto exchanges must register with the Financial Intelligence Unit and adhere to anti-money laundering norms.
