The Reserve Bank of India (RBI) has warned investors and the government about cryptocurrencies for some time now. The RBI has issued a warning against cryptocurrencies, primarily due to the current crypto market crash. They also cautioned investors and government agencies to avoid getting involved with these dangerous financial products that can lead them to lose their life savings overnight.
The governor of RBI, Shaktikanta Das, told CNBC-TV18 that they had been cautioning against cryptocurrencies and "look at what has happened to the crypto market now. If we were regulating it already, people would ask us what happened to regulation."
The Governor has alarming concerns about the impacts of crypto on India. He worries that it will cause a monetary crisis and hurt the country's financial stability and macroeconomic structure as well! On top of all these, he maintains his stance that crypto has no underlying value.
RBI is well known for its vocal opposition to cryptocurrency. A recent statement from the Reserve Bank of India mentioned that crypto could lead to 'dollarisation' in parts of India's economy. This is not an isolated incident as earlier; a top official said the same thing.
An RBI official said these coins are dollar-denominated, which could lead to sovereign interest erosion, which would be bad for India's economy as well! In a recent interview with CNBC, Das said the same thing. He noted that the government seems to sync with RBI's stance that crypto has no underlying value.
The Reserve Bank of India (RBI) has reportedly conveyed its position to the Indian government, and they will soon take a considered call. The Government is also equally concerned about these developments, according to Das.
The Finance Minister has made it clear that India will not be rushed into any decision over cryptocurrencies and other virtual digital assets as they wish to make an informed decision. The government wants to get all of its ducks in a row before taking such strides.
The crypto industry in India has been experiencing a difficult time lately. Starting with the new tax rule issued last month, other issues around payment mechanisms started impacting businesses, leading to exchange volumes decreasing even further than before.
At the same time, they await clarity on how this will affect them financially and legally from government officials who are still determining what constitutes digital currencies under law.
Despite all these uncertainties and lack of clarity, the popular cryptocurrency exchange Binance is looking for the best time to launch in India. They have been monitoring changes within the Indian regulatory environment closely.