'RBI Wants To Ban Crypto But Needs Global Support To Implement The Ban' Says FM Nirmala Sitharaman

It's been nearly a year since the Reserve Bank of India mentioned its intention to completely ban cryptocurrency and flagged it as a serious concern in December 2021.

And now, India's Finance Minister Nirmala Sitharaman has stated that the Indian government wants international collaboration if such a ban (on crypto) is imposed.

Unsplash

Also Read: Meet The 22-YO Entrepreneur From Bangalore Whose Tea Stall Accepts Crypto Payments

FM Sitharaman Addresses Crypto Queries

Addressing queries related to cryptocurrency in the Lok Sabha yesterday (December 14), FM Sitharaman said that the RBI has recommended framing legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited.

She went on to add that 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 international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards," she said, as per the Mint report.

PTi

Responding to a question about whether the 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, FM Sitharaman reportedly said, "RBI has been cautioning users, holders, and traders of virtual currencies (VCs) via public notices on December 24, 2013, February 1, 2017, and December 5, 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 on April 6, 2018 prohibiting its regulated entities from dealing in virtual currencies (VCs) or providing services for facilitating any person or entity in dealing with or settling VCs."

FM Sitharaman added that the RBI, with its circular dated May 31, 2021, has also advised its regulated entities to continue to carry out customer due diligence processes for transactions in VCs, in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT), obligations under the Prevention of Money Laundering Act (PMLA), 2002, etc., in addition to ensuring compliance with relevant provisions under the Foreign Exchange Management Act (FEMA) for overseas remittances.

¡°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 added while speaking at the Monsoon Session of the Parliament.

RBI Against Crypto

buyucoin

India¡¯s central bank, i.e., the RBI, has time and again clarified its stance against cryptocurrencies. From terming it a ¡®clear danger¡¯ to comparing it to a ¡®tulip¡¯ the RBI governor Shaktikanta Das has spoken against crypto multiple times, saying that anything that derives value based on make believe is just speculation under a sophisticated name.

Earlier in December 2021, the RBI had mentioned that it is in favour of a complete ban on crypto, stating it as a serious concern.

Even the RBI¡¯s deputy governor, T. Rabi Sankar, has fired shots at crypto multiple times this year.

In February, he compared cryptocurrency to Ponzi schemes and said that banning them and not regulating them would be the "most advisable choice" for the Indian government.

Then in June, RBI Deputy Governor T. Rabi Sankar had said that the central bank digital currencies (CBDCs), i.e. Digital rupee, can "kill" whatever little case that exists for private virtual currencies like Bitcoin.

Also Read: Crypto Will Collapse One Day, Says Rakesh Jhunjhunwala

Crypto Being Used For Illegal Activities?

Earlier this year in April, while addressing a seminar during the spring meet of the IMF, India¡¯s Financial Minister Nirmala Sitharaman had said: "I think the biggest risk for all countries across the board will be the money laundering aspect and also the aspect of currency being used for financing terror."

She added "I think regulation using technology is the only answer. Regulation using technology will have to be so adept, that it has to be not behind the curve, but be sure that it is on the top of it. And that's not possible. If any one country thinks that it can handle it. It has to be across the board."

And as recently as this month, India's Financial Intelligence Unit (FIU) tracked 3,300 crypto accounts in the last eight months that it suspected were being used for money laundering, drug trafficking, child pornography, and other illegal activities, including funding social unrest.

Also Read: Mystery Of Terra Luna Crash Deepens Afer FTX Collapse

For the latest and interesting financial news, keep reading Indiatimes Worth. Click here