India central bank wants to get rid of cryptocurrencies

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While Bitcoin is registering new highs and is adopted by top companies like Jack Dorsey’s Square and Elon Musk’s Tesla, among many others, India’s central bank seems to be distancing itself from cryptocurrencies.

The Reserve Bank of India is concerned that digital assets may affect financial stability in the third-biggest economy in Asia, a perception that could get in the way of proposed regulations on crypto that is surpassing price-records around the globe.

In fact, India is proposing to craft legislation that would restrict the holding of private cryptocurrencies like Bitcoin in the country. The plan was deliberated in the parliament’s ongoing budget session.

If passed, India’s Cryptocurrency and Regulation of Official Digital Currency Bill 2021 will impact the future of virtual assets in the country.

RBI has doubts about crypto

While the details have yet to be made clear, the planned legislation broadly entails prohibiting all private currencies and creating a new policy for the launch of an official electronic currency issued by India’s central bank.

In an interview with CNBC TV-18 last week, RBI Gov. Shaktikanta Das said that the central bank has “certain major doubts” about cryptocurrency and its potential impact on monetary stability.

The governor also pointed out that he had conveyed his concerns to the country’s regulators, which are set to draft legislation in the parliament banning private virtual currencies.

RBI crypto ban order

In 2018, RBI had restricted banks from transacting in digital currencies. However, after crypto exchanges retaliated with a lawsuit in the Supreme Court, the RBI overturned the ban two years later.

Just over a year ago, Indian digital currency exchanges were reeling from the effect of an RBI notice that mandated banks and financial institutions to shun cryptocurrencies.

While the circular has been revoked by India’s legislative officials, the shadow of a ban on digital assets in the country still looms large.

Image courtesy of ZimoNitrome/YouTube Screenshot

Jet Encila

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Jet Encila

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