Indias Draconian Take On Crypto It Aiming For A Blanket Ban?

[ad_1]

The Central Bank of India has long displayed strong hostility towards crypto. Since cryptocurrency has grown in popularity in a country that has 17.7% of the world’s population, the Reserve Bank of India (RBI) is considering ways to regulate the sector.

RBI Governor Shaktikanta Das has again expressed serious concerns over the regulation of the industry. This has kept investors and crypto enthusiasts on their toes as the annual budget date approaches. The Central Bank of India has now issued a stern warning against the use of Bitcoin and other virtual currencies.

The situation got even worse due to the crash of FTX. Governor Shaktikanta Das has time and again called crypto an “unstable instrument” which is “just gambling” because private digital assets have no intrinsic value.

At the Business Today Banking and Economy Summit, Governor Shaktikanta Das argued that private digital assets should be banned because they contain an “imaginary factor”. He also said that crypto is nothing but a “100% speculative world.”

Dollarization of the Indian economy

RBI Governor Shaktikanta Das pointed out that the FTX crash has proven how detrimental cryptocurrency being a speculative industry is to the economy. India has previously said that the influx of private digital assets will lead to dollarization of the economy, which is not ideal for the nation.

Das, speaking at the event, echoed the same sentiments, saying, “Dollarization would increase due to the growing use of crypto and could work against the sovereign interest of the country.” Not only has the dollarization of the economy affected India, but also the regulatory framework for digital assets.

Ironically, despite concerns about it, India still hasn’t finalized a bill to regulate the industry for years. On the contrary, Nirmala Sitharman did not suggest a blanket ban at the G20 summit in October; rather, she mentioned that India would aim to introduce a technology-driven regulatory framework to better regulate assets.

So is India not equipped enough to regulate crypto?

The question remains whether the Indian government is capable enough to regulate the industry. All the animosity towards the industry could be a false front to dissuade enthusiasts from staying away from the industry.

RBI also mentioned that private digital assets could cause “financial instability”, while announcing that if private virtual currencies are allowed to operate in the country, the RBI “could likely fail” to monitor such transactions.

Das added:

Crypto masquerading as a financial asset is a completely misplaced argument. Our country does not promote gambling.

Calling crypto a form of gambling does not distract from the fact that the Indian government has actually admitted to not having established the proper rules to govern the asset. It remains to be seen whether India can craft a regulatory framework to better control digital assets ahead of the annual Union budget of 2023.

Bitcoin was priced at $20,800 on the 1-day chart | Source: BTCUSD on TradingView

Featured image from UnSplash, chart from TradingView.com

[ad_2]