Private cryptocurrencies, according to the Reserve Bank of India (RBI), will be phased out with the introduction of central bank-issued digital currencies (CBDCs).
Despite being supported by excellent technology, the Indian Times reported on June 3 that the bank’s deputy governor T. Rabi Sankar indicated that private cryptocurrencies had the potential to be used for malicious reasons.
Sankar’s position on private cryptocurrencies adds to the Indian government’s opposition to cryptocurrencies as the country prepares to release a consultation paper on digital assets.
“We believe that CBDCs could actually be able to kill whatever little case that could be for private cryptocurrencies,”
Players in the crypto industry, on the other hand, have disregarded the RBI’s stance on CBDCs and private digital assets. The RBI projection, according to Vikram Subburaj, CEO of Giottus crypto exchange, is an attempt to restrict innovation in the crypto sector.
Sankar remarked at an event hosted by the International Monetary Fund (IMF) that the IMF should take the lead in the global cryptocurrency regulatory debate.
India’s push to regulate cryptocurrencies has escalated in the last year, with officials indicating that the consultation document was based on other countries’ legislation.
Officials led by RBI governor Shaktikanta Das have previously outlined various scenarios that could result from cryptocurrency legalization. Das cautioned that the dollarization of the country’s economy could result from the denomination of most cryptocurrencies by the dollar.
He claimed that dollarization is harmful to India’s sovereignty and that digital currency poses a risk to financial stability.
Furthermore, numerous rules have been presented in recent months as the country draws closer to passing a legal law to oversee the sector. For example, during this year’s annual budget, the government committed to tax earnings derived from cryptocurrency investments at a rate of 30%.
With millions of people losing their money due to the recent breakdown of the Terra ecosystem, the pressure to regulate cryptocurrencies has escalated. The state, through the RBI, has previously warned citizens against investing in cryptocurrencies at a time when digital assets are attracting a growing number of people in the country.
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