Indian Central Bank Chief Raises Alarm on Cryptocurrencies

The governor of the Reserve Bank of India (RBI), Shaktikanta Das, has raised fresh concerns over the impact of cryptocurrency investments on the country’s economy but is optimistic about the launch of a digital rupee.

In an interview with CNBC TV-18 on Wednesday, Das revealed that the monetary regulator had shared its “major concerns from the financial stability angle” with the government. However, he did not elaborate on what exactly these concerns are.

His remarks came ahead of the introduction of the bill that is expected to outlaw the distribution and usage of cryptocurrencies in India. He also said that the government is considering RBI’s concerns and expecting a decision “sooner or later.”

The Indian central bank was always critical about digital currencies as it earlier warned against their usage in money laundering and terror financing. Its hostility peaked in 2018 when it issued a circular banning all regulated banking entities from offering services to crypto companies. That order was reversed by the apex court.

Now when the demand for cryptocurrencies is surging again, the Indian government is planning a ban on them with law.

“If required, the Parliament also will consider and decide,” Das said.

Digital Rupee Is On the Way

The RBI, however, is in favor of a central bank digital currency (CBDC) as the governor said that a “lot of work is going on there.”

“The RBI team is working on it, both the technology side as well as the procedural side,” Das added.

The Indian central bank is lagging much behind its Chinee counterpart, which is aggressively piloting the usage of digital yuan. Though Das could not confirm any timeline of digital rupee launch, he said that the regulator is “targeting to launch” at some point.

“Several loose ends need to be tied up, but it’s receiving our full attention,” he said.

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