RBI Governor Shaktikanta Das has revealed that the RBI still has “serious and major” reservations about cryptocurrencies like Bitcoin and has conveyed those concerns to the government.
Speaking at an event, the Governor stated that it is up to the government to take a call on what needs to be done in the matter (regarding crypto) while adding that he would like to have “credible explanations and answers” on the value these instruments can bring to the Indian economy.
Under Regulatory Gaze
Cryptocurrencies like Bitcoin, which are essentially private and are not regulated and are known for their volatility, have been under regulatory scrutiny in India. This comes despite their proliferation as an asset class.
India To Classify Bitcoin As An Asset Class
After El Salvador’s historic decision to adopt Bitcoin as legal tender bypassing the Bitcoin law, sources in India have revealed that the government could be planning a similar move in India. According to a report, the Securities and Exchange Board of India (SEBI) is overseeing the regulations being drafted for the cryptocurrency sector, with Bitcoin being classified as an asset class.
In a whitepaper published by Indiatech.org, Bitcoin’s adoption as an alternative asset class under India’s regulatory bodies is realistic due to the volatility in the crypto sector, the digital nature of cryptocurrencies, and projects developing rapidly, which does not make it ideal as an instrument to make payments.
India Planning To Test Digital Currency In December
In an interview with CNBC, RBI Governor Shaktikanta Das revealed that India plans to start testing the “digital rupee” in December. The testing would mainly focus on the security of digital currencies and the impact that they might have on monetary policy. RBI’s interest in launching a digital version of their fiat currencies is in line with other central banks around the world exploring and looking to launch their own digital currencies.
With testing scheduled to begin in December, the RBI will also study the impact of a CBDC on the monetary policy, currency in circulation, and other issues. Das commented,
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally.”
Other countries are at different stages of testing their digital currencies.
RBI Clarifies Its Stance On Cryptocurrencies
The RBI has stated that it has not changed its position on cryptocurrencies and that it still has reservations about crypto, and these have been conveyed to the government. The RBI made the statement after leading Indian Bank HDFC warned its customers against dealing in cryptocurrencies such as Bitcoin, Ethereum, etc., in a cautionary warning to customers.
The emails were sent in response to customers who had declared an interest in the transaction of cryptocurrencies. The bank cited a 2018 order from the Reserve Bank of India that stated that the transactions of cryptocurrencies were illegal in India. The RBI was obligated to intervene in the matter, stating that the circular was struck down by the Supreme Court of India and could not be cited by the bank to prevent cryptocurrency transactions.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.