The Reserve Bank of India (RBI) Governor Shaktikanta Das maintained the banking regulator’s strong stance against crypto as he said cryptocurrencies can create financial instability. During an ET Now interview, Das said that crypto can create financial instability and pose a major risk for small investors. Das’ latest comments on crypto come at a time when the overall cryptocurrency market is facing a global meltdown in prices, with Bitcoin (BTC) seeing a three-week low over the weekend. Das had earlier described crypto as a “clear danger”, saying that anything that derives value based on make-believe, without any underlying, is just speculation under a sophisticated name.
According to Das, cryptocurrency can impact the exchange rate. As a result, crypto could create financial instability, the governor added. As mentioned earlier, Das stressed that dealing with cryptocurrencies may pose a big risk for small investors. However, he also said that in the case of crypto, the benefit of technology needs to be capitalised. The Centre is presently in the process of finalising a consultation paper on crypto and its various facets, after gathering inputs from stakeholders and institutions.
Earlier in June, Das had said, “We must be mindful of the emerging risks on the horizon. Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name.”
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India is also looking to tap into the digital coin space by introducing its very own central bank digital currency (CBDC). In February, during her Union Budget speech, Finance Minister Nirmala Sitharaman announced the introduction of a CBDC for India. Calling it a ‘digital rupee’, Sitharaman emphasised that its launch by the Reserve Bank of India (RBI) in this financial year will boost the digital economy and lead to a more efficient and cheaper currency management system.
For those unaware, CBDC is a “legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency,” as defined by the RBI. To put it simply, CBDC is only a digital form on a national currency, and hence will not be prone to volatile price fluctuations like other cryptocurrencies such as Bitcoin, Ethereum (ETH), Dogecoin (DOGE), and others.
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In India, cryptocurrencies are deemed virtual digital assets (VDAs) and as such, face a 30 percent tax on all gains. On top of that, a TDS of 1 percent is imposed as well.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.