The Reserve Bank of India (RBI) has advocated for a blanket ban to be imposed on the digital currency ecosystem as the central bank believes this nascent asset class poses a threat to the rise of the country as a global power.
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While the underlying concern seems noble, the call from the RBI, which comes as a published critical bulletin, has sent the crypto world into a new frenzy, having nursed the possibilities of these currencies being regulated in the country.
India remains a crucial hub for the future of digital currencies, not just because of its population and market but also because great talents come from the country. In the Bulletin, the RBI acknowledged and commended the technology backing the cryptocurrencies. The understanding that their existence poses a threat to the financial sovereignty of India is enough ground for an outright ban.
“Historically, private currencies have resulted in instability and have evolved into fiat currencies over centuries. The retrograde step back to private currencies cannot be taken simply because technology allows it without considering the dislocation it causes to society’s legal, social and economic fabric.”
Indian authorities were making excellent headway in pushing for the regulation of the crypto ecosystem as consultations with important stakeholders is already underway. With a new tax proposal being introduced in recent times, Indian crypto investors already feel that the country is finally tilting as being a pro-crypto nation. The current insinuations from the RBI may serve as a setback to these advanced strides with respect to crypto engagement in India.
Talking about the situation of current investors, the RBI note says anyone whose money is tied in crypto will be given ample time to liquidate their holdings. However, the bank noted that the fact that these investors understand the risks in the space should make them ready to stomach any turn in events.
“Persons who have invested in these instruments are fully aware of the risks involved. Investors who have acquired these instruments have done so with their eyes wide open, at their own risk, and do not warrant any regulatory dispensation.”
The varying interest in the Indian crypto ecosystem has introduced an additional level of uncertainty to the country.
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