RBI supports blanket ban on cryptocurrency; sent letter to Central Board

The Reserve Bank of India (RBI) has told its central board that it favours a blanket ban on cryptocurrencies, according to persons familiar with the central bank’s board meeting on Friday.

According to one source, the RBI presented a lengthy presentation to the board, noting “severe concerns” about macroeconomic and financial stability, as well as exchange management. “The board was informed of the RBI’s position on the topic.” The central bank also emphasised the difficulty of controlling intangible assets originating in other countries.

Some look for neutral view

The RBI stated that these are available for trade on overseas exchanges, citing concerns about transaction secrecy, according to another source.

“Cryptocurrencies are a big worry to the RBI from the standpoint of macroeconomic and financial stability,” RBI governor Shaktikanta Das earlier stated. “As the central banker, we have major concerns about it and have raised it numerous times.”

According to the second source, several board members sought a balanced perspective on these digital assets, taking into account technological changes as well as the broader ramifications for the financial industry.

The RBI stated in a statement on Friday, “The board also reviewed different factors relevant to the Central Bank Digital Currency and private crypto currencies.”

The government had planned to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the Lok Sabha during the winter session of parliament. It had previously been scheduled for the budget session but was unable to be introduced because the administration opted to revise it.

The proposed measure aims to lay the groundwork for the development of an official digital currency to be issued by the RBI. Its goal is to outlaw private cryptocurrencies in India while allowing for some exclusions to promote cryptocurrency’s underlying technology and applications.

Prime Minister Narendra Modi will make the final decision on the outlines of the proposed cryptocurrency system. The measure is unlikely to be submitted during the current session, according to reports earlier this week, since the government wants to conduct more extensive consultations.

The Prime Minister has already held multiple rounds of negotiations on the subject.

In July 2019, a high-level government panel proposed an absolute ban on all forms of private cryptocurrency. It had proposed a punishment of up to Rs 25 crore and imprisonment for up to ten years for anyone who dealt in them.