According to Reserve Bank of India officials, cryptocurrency “would substantially weaken the RBI’s authority to make monetary policy and control the country’s monetary system.”
The Reserve Bank of India (RBI) has allegedly raised concerns about crypto adoption; it claimed that it will eventually lead to the “dollarization” of the Indian economy. The RBI worries about USD cryptocurrencies stealing market share from the Indian rupee; according to a Monday story in the Indian edition of the Economic Times, which cited anonymous sources. The RBI officials, including Governor Shaktikanta Das, gave a briefing to the Parliamentary Standing Committee on Finance this week.
Officials Remain Concerned
They expressed their skepticism about crypto’s potential impact on the banking system in it. According to an anonymous official: “Because almost all cryptocurrencies are dollar-denominated and issued by foreign private organizations, it might lead to the dollarization of a portion of our economy, which would be detrimental to the country’s sovereign interests.” “It [crypto] will severely impede the RBI’s ability to set monetary policy and control the country’s monetary system,” they warned.
The idea of using crypto in cross-border transactions instead of the rupee irritated the RBI. It also mentioned the usual anti-crypto cliches of terror funding, money laundering, and drug trafficking. The RBI has shown anti-crypto sentiment twice this month. Coinbase CEO Brian Armstrong claimed last week that the exchange’s unexpected shutdown of its United Payments Interface (UPI) in India was due to RBI pressure. Since detailing intentions to regulate the industry in December, the Indian government is not looking kindly on digital assets; instead, it has taken a somewhat restricting stance on crypto.
The government imposed a 30% crypto tax on digital asset ownership and transfers on April 1; moreover, it had various additional strict taxation standards based on gambling and lottery ticket win tax regulations. Trading volume on prominent Indian crypto exchanges dropped by as much as 70% in the ten days after the legislation’s implementation.