RBI alerts Indian government on major concerns about cryptocurrency

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TL;DR Breakdown:

  • RBI conveys major concerns about cryptocurrency to the Indian government.
  • The bank is readily looking to launch a central bank digital currency while they prohibit private cryptocurrencies.

The Indian government is yet to conclude on the fate of cryptocurrencies in the country. In recent days, several authorities in the country issued warnings concerning the use of cryptocurrencies, and this doesn’t exclude the Reserve Bank of India (RBI). The central banks still maintain that cryptocurrencies can undermine the financial stability of the economy. Alternatively, the RBI is pushing towards the development of a digital Rupee.

RBI warns Indian government about crypto

Bloomberg reported the development, citing Governor Shaktikanta Das’ interview with CNBC on Wednesday. According to him, the central bank warned the Indian government that cryptocurrencies could affect the financial stability of the country, which is considered the third-largest economy in the whole of Asia. Governor Das didn’t make any in-depth elaboration on this; however, he did mention that India’s central bank conveyed “major concerns” about cryptocurrencies to the government.

The central bank of India has since maintained its opposing view about cryptocurrency, owing to the fact that digital currencies like Bitcoin are risky and can be used to facilitate money laundering and funding of terrorist groups. Many financial institutions were warned not to associate with cryptocurrency-related companies until the Supreme Court revoked that blanket ban in March last year.   

Again, Prime Minister Narendra Modi’s administration is pushing for the ban of private cryptocurrencies.

Indian digital Rupee

As an alternative, the authorities are proposing the launch of a digital Rupee. According to Governor Das, the central bank is well interested and ready to roll out the central bank’s digital currency. No official date has been announced for the digital Rupee. However, the Governor did mention that the central bank is actively working on the procedural aspect and technology for the digital currency.

Recently, the central bank of Nigeria (CBN) also prohibited banks in the country from serving crypto companies, citing risks.