Shortly after Finance Minister Nirmala Sitharaman informed parliament that the Reserve Bank of India supports the cryptocurrency ban but the Indian government will regulate digital assets based on a global framework, the Indian crypto community said the country must take steps to the best practices associated with the asset class and take advantage of them. Some experts even agreed on the RBI’s stance that cryptocurrencies cannot be mainstream currencies.
“What the finance minister has stated in parliament are two well-known positions, which are firstly that RBI is not in favor of Cryptos and secondly that the government wants to be in compliance with global regulations. What we are saying is that the governments around the world are figuring out how to regulate Crypto,” said Rajagopal Menon, vice president at leading crypto exchange company WazirX.
“Cryptocurrencies are by definition borderless and require international cooperation to avoid regulatory arbitrage. Therefore, any regulation or prohibition legislation can only be effective after significant international cooperation in assessing the risks and benefits and the evolution of common taxonomy and standards,” Finance Minister Nirmala Sitharaman told parliament on Monday when asked about India’s stance on this digital asset class.
“Crypto is an asset class that is regulated globally and India should not miss out on its benefits. We need to take an example of countries that have already regulated crypto and see how they have benefited from job creation, economic growth, empowering entrepreneurs, etc,” Menon told News18.com.
“That’s why India needs to take a step to work together and understand the best practices so that we don’t lose in the longer term. Developers are working on a vision to create India’s next Facebook and Google in Web3 and the government can benefit immensely by helping these entrepreneurs achieve their goals,” he added.
However, Suman Banerjee, CIO at Hedenova said RBI’s stance is justified as cryptocurrencies can be used for money laundering in the Indian context.
“According to The Coinage Act, 2011, the RBI is right. Currency can only be produced by RBI. The Ministry of Finance has clarified that cryptocurrencies are an asset and not a currency. The debate goes beyond this. The real reason the RBI wants to push back cryptos is because of its use in money laundering,” he told News18.com.
Banerjee added that the use of crypto as legal tender should be monitored. “India is a convertible country with no capital. This means that there are many rules for Indian people or companies about their ability to exchange the rupee for another currency. When many Indians start doing this i.e. selling rupees and buying another currency, the rupee weakens. Cryptocurrencies are denominated in US dollars. Bitcoin in $20,000. You never hear that Bitcoin is 15 lakh rupees. The RBI is right, in the Indian context, the use of cryptos as legal tender should be monitored,” he noted.
The Reserve Bank of India has repeatedly warned about the macroeconomic effects of cryptocurrencies and pointed to their problems while questioning their underlying fundamentals. The central bank governor even called cryptocurrencies a “real danger” in the RBI’s annual report. However, India is unlikely to impose a ban on cryptocurrencies right away, and has instead started levying high taxes on virtual digital assets.
Get all the latest news, breaking news, watch top videos and live TV here.