Indian Finance Minister Nirmala Sitharaman has taken a clear stance on Bitcoin (BTC) and other digital assets, stressing that they cannot be considered currencies.
Sitharaman says she expects the G20 – the intergovernmental forum consisting of 19 sovereign countries, the European Union (EU) and the African Union (AU) – to draft a regulatory framework for cryptocurrencies.
Sitharaman also emphasized that crypto assets are predominantly used for trading, speculation and profit-making activities and do not function as traditional currencies issued by central banks.
Sitharaman also highlighted how cryptocurrency assets thrive through trading and speculation.
Sitharaman argues that the lack of regulatory action has global implications due to the potential influence of cryptocurrencies on cross-border payments and illegal activities such as drug trafficking or terrorism.
Sitharaman participated in the G20 discussions to address the challenges posed by crypto assets and pushed for a unified global regulatory framework.
She emphasized the importance of international cooperation in developing robust regulations that can effectively manage the risks associated with cryptocurrencies.
RBI governor warns about crypto risks
The Indian government welcomes blockchain technology but has reservations about cryptocurrencies due to their volatility and speculative nature.
In India, cryptocurrencies do not have legal tender status and there are currently no specific regulations governing them.
The recent introduction of the Law on Cryptocurrencies and the Regulation of Official Digital Currencies underscores the government's call for a global consensus on minimum cryptocurrency regulations and highlights the need for international cooperation.
Additionally, the Reserve Bank of India (RBI) has taken a cautious approach towards cryptocurrencies and highlighted the importance of regulatory caution to maintain financial stability.
In 2022, Governor Shaktikanta Das expressed concerns about the lack of underlying value of cryptocurrencies and emphasized the need to maintain financial stability amid the increasing global popularity of cryptocurrencies.
The RBI's cautious strategy aims to protect India's financial sovereignty and mitigate potential disruptions in the banking system that could result from unregulated cryptocurrency activities.
By issuing alerts and encouraging regulatory caution, RBI aims to maintain resilience and security within the Indian financial ecosystem in response to changing digital asset environments.
Das further warned that the crypto “party” is not risk-free. Nevertheless, the RBI remains vigilant in managing emerging risks and challenges while cautiously considering the possibility of launching a central bank digital currency (CBDC).
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