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, customer protection and security related risks
BENGALURU : The Reserve Bank of India (RBI) is of view that cryptocurrencies should be prohibited as they could adversely affect the Indian economy, finance minister Nirmala Sitharaman informed the Parliament in a written reply on Monday.She added that RBI has said that cryptocurrencies could have a destabilizing effect on the monetary and fiscal stability of the country and has recommended framing of legislation on this sector… In view of the concerns expressed by RBI on the destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country, RBI has recommended framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited,” Sitharaman informed Lok Sabha on Monday.“The RBI has registered its concern over the adverse effect of cryptocurrency on the Indian Economy. In view of the concerns expressed by RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, RBI has recommended framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited,” Sitharaman said in her reply. She said that as cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage, any legislation for regulation or for banning can be effective only after significant “international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”The FM reply comes amid speculation that the government could introduce legislation to regulate the crypto sector. However, no such Bill has been listed for introduction in the monsoon session of the Parliament that started on Monday. The government has announced a tax on gains from virtual assets. The 30% tax rate on virtual currency assets has come into effect from April 1 and the government has also introduced 1% TDS from July 1 this year. The RBI has mentioned that cryptocurrencies are not a currency because every modern currency needs to be issued by the Central Bank or Government, said Sitharaman.“According to RBI, 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,” said Sitharaman in a reply.
To a question, whether RBI has issued instructions, circulars, directions, warnings etc. regarding restricting the issuance, buying, selling, holding and circulation of Cryptocurrency in India during the last ten years, the FM replied, “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, customer protection and security related risks. RBI had also issued a circular in April 6, 2018 prohibiting its regulated entities to deal in virtual currencies (VCs) or provide services for facilitating any person or entity in dealing with or settling VCs.”
Source:livemint