India’s Central Bank Is Keen to Ban Cryptocurrencies, Says Finance Minister

India has been doing flip-flops over the last few years over its decision to allow the use of cryptocurrencies in the country. On Monday, Indian Finance Nirmala Sitharaman said that the Indian central bank – Reserve Bank of India (RBI) – is keen to ban the use of cryptocurrencies in the country.

Her fresh comments while addressing parliament members shows the growing uncertainty surrounding digital assets. The Indian finance minister said that RBI has expressed concerns about the “destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country”.

While speaking about having legislation in this sector, Sitharaman added that “RBI is of the view that cryptocurrencies should be prohibited”. However, Sitharam said that introducing any legislation for regulatory purposes or deciding to ban them would require significant international cooperation. As per the draft, the Indian Finance Minister said:

“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”.

India’s Crypto Crackdown

Earlier this year, India introduced a strong 30% tax on the profits derived from crypto trading. The reason behind imposing this heavy tax was to discourage investors. The tax rules did have an impact as trading volumes went dry at crypto exchanges over the last few months.

On the other hand, banks have called off ties with major crypto exchanges. This has put a big dent in the Indian liquidity coming to the crypto market. Cryptop exchange Coinbase had to stop its services in India due to informal pressure from the RBI.

The recent turn of events has left Indian crypto investors in an absolute uncertain zone. It will be interesting to see how the government and the RBI coordinates to take a balanced approach.