India’s Central Bank Seeks to Ban Cryptocurrencies in India

• he Government of India wants to ban cryptocurrencies in the country.
• FM Sitharaman told the parliament that the RBI was concerned about the effects of crypto in the country.
• Earlier this year, India imposed 30% tax on crypto transactions and profits.

The turmoil of cryptocurrency has been rising in India after its government said the central bank of India demanded cryptocurrencies to be forbidden in the country. 

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On Monday, India’s finance minister Nirmala Sitharaman told the parliament that the Reserve Bank of India has suggested “framing the legislation” on the crypto sector and was looking to “prohibit” cryptocurrencies. The statement was followed after RBI expressed concerns in regards to the “destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country.”

Earlier this year, India announced taxing of transactions and profits affiliated with crypto trading by 30%, a move where RBI seeks to adopt the fast-growing technology. However, traders and companies have felt the burden that the imposed tax has caused.

The central bank of India keeps on compelling banks from collaborating with crypto platforms in the country. Earlier this year, crypto exchange Coinbase froze crypto transactions in India because the RBI had been applying “informal pressure” in the firm. Last week, the Internet and Mobile Association of India renounced crypto due to regulatory uncertainty.

T. Rabi Sankar, deputy governor of Reserve Bank of India, pointed out at a banking conference that crypto was “specifically developed to bypass the regulated financial system.” RBI compared crypto to a “Ponzi scheme” and proposed an outright ban throughout the country.

Sitharaman detailed: 

Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore 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.

The response of the country’s finance minister constitutes further obstacles on top of market uncertainty in regard to the country’s crypto innovation. Leaving the local and international firms to stop providing services for the customers in India.

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