RBI warns against “immediate risks” of private cryptocurrencies

The latest update in the Indian crypto sphere saw the Reserve Bank of India (RBI) reiterate its anti-crypto stance. However, this time around RBI alerted investors against the “immediate risks” of private cryptocurrencies in particular.

The Indian Central bank recently released its financial stability report which pitted against private crypto claiming it poses an immediate threat to consumer protection, anti-money laundering, and combating terrorism financing. Furthermore, the bank also reinstated its long standing argument against crypto concerning the long-term risks to capital flow management, financial and macro-economic stability, monetary policy transmission and currency substitution.

“Private cryptocurrencies pose immediate risks to consumer protection and anti-money laundering (AML)/combating the financing of terrorism (CFT). They are also prone to frauds and to extreme price volatility, given their highly speculative nature. Longer-term concerns relate to capital flow management, financial and macro-economic stability, monetary policy transmission and currency substitution”, stated the report.

RBI highlights the issue of “reduced transparency”

The report also highlighted the concern of global proliferation of private cryptocurrencies that has led to sensitisation of regulators and governments to the associated risks. RBI referred to the Financial Action Task Force (FATF) data confirming the hike in anonymity-enhanced cryptocurrencies (AECs), along with DEX platforms, private wallets, etc. The Central Bank asserted that this substantial surge in financial anonymity may cause a considerable damage to the nation’s economy in the future.

“According to the Financial Action Task Force (FATF)12, the virtual asset ecosystem has seen the rise of anonymity-enhanced cryptocurrencies (AECs), mixers and tumblers, decentralised platforms and exchanges, privacy wallets, and other types of products and services that enable or allow for reduced transparency and increased obfuscation of financial flows”

It is common knowledge now that the RBI has argued against the use of crypto time and again. Earlier this month, the market was raging with speculations of the RBI-pitched blanket ban on crypto in India. In the Central Board of Directors of Reserve Bank of India’s meeting, it was alleged that the RBI presented the long-term financial stability concerns that crypto raises. However, it was never confirmed whether these speculations were facts, yet RBI’s intent towards crypto in India seems obvious to many.