The Reserve Bank of India (RBI) has spoken to parliament about the uncertainty surrounding the coins and suggested tighter regulations and “framing of legislation”.
“RBI is of the view that cryptocurrencies should be prohibited”, finance minister Nirmala Sitharaman said.
Concerns were also raised around the “destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country”.
Forming legislation or enforcing a ban on cryptocurrencies will require “significant” international collaboration.
“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. 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”, Sitharaman added.
Earlier this month, The Financial Stability Board (FSB) comprising treasury officials, regulators, and central bankers from the G20 economies said it would suggest “robust” universal rules for crypto later in October.
It stated that originally crypto was for “speculative purposes” as opposed to operating in a “regulation-free space”.
At the start of the year, India decided to tax digital assets, proposing a 30% tax on profits or income made from NFTs and crypto.
Many saw this as a step in the direction of accepting the new technologies, thus adapting them into traditional finance.
However, with the conversation focused on a possible ban on the currencies, it looks like India’s crypto adoption is taking a step back from launching digital currencies.
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