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RBI wishes crypto to be banned: Centre says global collaboration needed to prevent regulatory arbitrage

"In view of the concerns expressed by the RBI on the destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited," the finance minister said in Parliament.

ET Now Digital

Updated Jul 18, 2022, 13:43 IST

New Delhi: The Reserve Bank of India doesn’t seem to a big fan of cryptocurrencies and it wouldn’t come as surprise for anyone who has been following the central bank’s views on virtual currencies. The same was reiterated in the Lok Sabha by Finance Minister Nirmala Sitharaman on Monday as she gave a reply to a question on cryptocurrencies.

RBI is of the view that cryptocurrencies should be prohibited. The bank has recommended to the government that it should frame regulations for cryptocurrencies and prohibit them, FM Sitharaman said in Parliament.

The government, however, believes that 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.

She further noted that given the borderless nature of cryptocurrencies, international collaboration was required to prevent any kind of regulatory arbitrage.

This comes over a month after Economic Affairs Secretary Ajay Seth shared that the government is almost ready with its consultation paper on crypto. In May, Seth had told reporters that the consultation paper is fairly ready and for this they consulted not just domestic stakeholders but also organisations like IMF, World Bank.

Meanwhile, the Centre has refrained from confirming what its view on crypto is. However, the Union Budget 2022 introduced taxation on Virtual Digital Assets (VDA), commonly referred to as cryptocurrencies. From July 1, 2022, tax will be levied on transfer of VDA at a flat tax of 30 per cent (besides cess and applicable surcharge).

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