It’s been months, and the fight surrounding crypto in India doesn’t appear to have an end in sight. The Reserve Bank of India (RBI) and its deputy governor T Rabi Sankar have recently issued statements saying that the only way to deal with crypto within the nation’s borders is by banning it.
India and Crypto… The Fight Is Still Waging
The words came at the recent Indian Banks Association 17th Annual Banking Technology Conference and Awards. Not long ago, it was announced that India was looking to declare crypto its own monetary system and that the country was going to regulate it as such. It was also said that the country would be issuing a digital version of its national fiat currency.
However, it’s clear today that not everyone is a fan of these options, including Sankar. He explained:
We have examined the arguments proffered by those advocating that cryptocurrency should be regulated and found that none of them stand up to basic scrutiny.
India has had one of the most up-and-down relationships with crypto in history. Back in 2018, the RBI ruled that any business delving in crypto and blockchain was not permitted to gain access to traditional financial tools like bank accounts. However, this was later ruled unconstitutional by the nation’s Supreme Court, and the ban was reversed.
It was believed India would then become one of the world’s biggest crypto havens, but things didn’t turn out that way. The nation immediately jumped into a discussion of potentially banning all crypto transactions and related activities and punishing those who got involved with prison terms and fines.
In the past, members of the RBI have stated that crypto poses a severe threat to economic stability. Former RBI governor Shaktikanta Das said in an interview:
I think it is my duty to tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip.
Sankar is also worried that crypto will somehow make India easy to manipulate by private corporations. He believes this will give companies the power to create currencies that the government has no hand in and cannot control. He says:
More substantially, they can (and if allowed, most likely will) wreck the currency system, the monetary authority, the banking system, and in general, the government’s ability to control the economy.
What Does the RBI Want to Do?
Nirmala Sitharaman – the Union finance minister – says it is fine to act on crypto in any way the RBI sees fit. He stated:
Whatever the government does, we consult and have discussions with the RBI. So, if I were to tax 30 percent and then discuss the goods and services tax (GST) and everything else, I would be tying RBI’s hands if I hadn’t even talked to them!