The Reserve Bank of India (RBI), according to Indian Finance Minister Nirmala Sitharaman, supports the ban on cryptocurrency. However, she believes that this process would be impossible without significant international cooperation.
Crypto regulation India requires global collaboration
According to a local media report from today, India’s finance minister Nirmala Sitharaman wrote a statement in response to five written questions from Thirumaavalavan Thol, a member of parliament. The questions included whether the RBI remains concerned over the impact of cryptocurrencies on the economy and whether there was any effective legislation to restrict its usage.
“RBI has recommended for framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited. Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage,” Sitharaman wrote.
Sitharaman, however, seems to believe that a “global collaboration” is needed for any effective regulation or ban.
“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 added.
The finance minister also told Parliament that the RBI does not consider cryptocurrencies to be actual currencies because modern currency can only be issued by central banks or governments. Furthermore, the value of cryptocurrencies is solely based on speculation, she added. As she pointed out, unanchored expectations of high returns would have a “destabilizing effect on a country’s monetary and fiscal stability.”
Sitharaman’s remarks coincide with India’s adoption of a strict taxation regime, including a 30% crypto tax, 1% TDS, and a potential 28 percent tax inclusion in the GST ambit.
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