Reserve Bank of India calls for global collaboration to ban crypto

LAGOS (CoinChapter.com) — The Reserve Bank of India has once again reiterated its stance toward digital assets, calling for an all-out ban on all forms of cryptocurrency.

Finance Minister Nirmala Sitharaman made this known while addressing queries concerning cryptocurrencies in the Lok Sabha (India’s bicameral Parliament). Sitharaman disclosed that the Reserve Bank of India has recommended to the government that it should formulate regulations for cryptocurrencies.

She said the bank was ready to ban cryptocurrencies but wanted a global collaboration to effect it. Sitharaman explained that digital assets are borderless and require international cooperation to prevent regulatory arbitrage.

“Therefore any legislation for regulation or banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”

Sitharaman said.

The finance minister further issued warnings to crypto users, holders, and traders of high risk when dealing with cryptocurrencies. She explained that dealing with crypto carries potential economic, financial, operational, legal, customer protection, and security-related risks.

Cryptocurrencies Are Not Currency, Says Reserve Bank of India

Meanwhile, Sitharaman also revealed that the Reserve Bank of India does not consider digital assets a form of currency. In her address at the Lok Sabha, she highlighted several reasons why cryptocurrencies aren’t an actual currency.

Firstly, the finance minister posited that every modern currency needs to be issued by the Central Bank. She argued that if the government doesn’t issue it, such assets cannot be considered an actual currency.

Furthermore, Sitharaman explained the value of fiat currencies is anchored by monetary policy and their status as legal tender.

On the other hand, she assumed that the value of cryptocurrencies rests solely on speculations and is not well anchored. Hence, resolving that digital asset will have a destabilizing effect on the monetary and fiscal stability of a country.

Shaktikanta Das, the Reserve Bank of India governor, also described cryptocurrencies as a “clear danger.” Das said the financial system is increasingly digitalized, noting that cyber risks are growing and need special attention.

“We must be mindful of the emerging risks on the horizon. Cryptocurrencies are a clear danger. Anything that derives value based on make-believe, without any underlying, is just speculation under a sophisticated name.”

Das said.

India Government Set To Shut Down BACC

Additionally, reports have emerged that the Indian government is planning to dismantle the Blockchain and Crypto Assets Council (BACC). Notably, the report rose due to the growing conflict between the Reserve Bank of India and crypto exchanges over the legal status of cryptocurrencies in India.

While crypto exchanges and blockchain companies are trying to form an independent association, the government is looking to shut down both groups.