RBI Crypto News: RBI should hold debates, discussions before any crypto decision: Experts

Synopsis

Market experts said that banning cryptocurrencies is not the right way forward, rather the easiest way out for now

RBI has always been an active critic of crypto assets and vocal advocate to put a blanket ban on the private crypto assetsReserve Bank of India (RBI) has been a stringent critic of crypto assets, reiterating its tough stand on the new age asset class.

Deputy governor T Rabi Sankar called for an outright ban on private cryptocurrencies at the IBA Banking Technology Awards. He claimed the notorious early 20th century Ponzi schemes were better than investing cryptos.

Prior to this, RBI governor Shaktikanta Das said that private cryptos are a serious threat to macroeconomic and financial stability, and investors should keep risks in mind as such assets have no underlying value whatsoever, ‘not even a tulip’.
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The harsh remarks from the central bank has vexed the crypto industry. They suggested the RBI hold debates and discussions at various forums before making a final conclusion.

Rahat Beri, Founder and CEO, Acryptoverse, a crypto advisory firm said that cryptos are a budding technology and an asset class that should have the freedom to be explored with guardrails. “Otherwise we risk being left behind.”

“Stablecoins are backed by currency, assets or other projects. We have seen success right in our own backyards,” he added. Cryptos come with multiple challenges and these must be addressed, experts said. Authorities should move in the direction of debate, assessment and deliberation over such assets.

RBI has always been an active critic of crypto assets and vocal advocate to put a blanket ban on the private crypto assets. Proliferation of such currencies will undermine the rupee, it adds.

Repulsing from RBI’s opinion, market experts said that banning cryptocurrencies is not the right way forward, rather the easiest way out for now.

In a country like India, there are many conflicts of interest, said Anndy Lian, Chairman, BigONE Exchange. “The central bank should find a way to embrace it and build a different and hopefully better future with this form of currency,” he added.

Change is never accepted easily, said Beri. “A decade ago, no one gave online payments much of a chance and today the common man uses it. A nascent technology comes with inherent challenges.”

In the union budget 2022, Finance Minister Nirmala Sitharama announced that the gains arising from the transactions in the private crypto assets will be taxed at a flat rate of 30 per cent, with no exemption or deduction.

The loss arising from the sale of any virtual assets cannot be set off against any other income. TDS at the rate of 1 per cent would be levied on payments made on transfer of digital assets.

The move was welcomed by the crypto players, particularly the exchanges. Reading between the lines, they expected a positive regulatory framework to the new age asset class. However, after RBI comments, the dreams appear to be shattered.

The crypto companies may also hold back on their expansion plans just because there are no clear instructions from the government, said the crypto experts.

Jay Hao, CEO of OKX said that it’s important for the regulators of a country to be on the same page to form the crypto policy framework. He believes that India needs clear guidelines for the continued growth of the crypto ecosystem.

“Multiple statements from officials may create confusion in the minds of investors which could be harmful for the users,” Hao added.

“The lack of clarity on regulations also discourages foreign institutional investors from investing in the sector.”

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Updated: 02/16/2022 — 07:00