Indian Finance Minister Nirmala Sitharaman firmly states that Bitcoin (BTC) and other digital assets cannot be considered as currencies. She expects the G20, an intergovernmental forum representing 19 sovereign countries, the European Union (EU), and the African Union (AU), to develop a regulatory framework for cryptocurrencies.
Sitharaman highlights that these assets are primarily used for trading, speculation, and profit-making rather than acting as traditional currencies issued by central banks. She also emphasizes how crypto assets thrive on trading and speculation.
The lack of regulatory measures for cryptocurrencies has global implications, as they can potentially impact cross-border payments and facilitate illicit activities such as drug trafficking or terrorism. As a result, Sitharaman has been actively involved in G20 discussions to address the challenges posed by crypto assets and advocate for a unified global regulatory framework.
In her efforts to promote international collaboration, Sitharaman stresses the importance of crafting robust regulations to effectively manage the risks associated with cryptocurrencies.
Meanwhile, the Indian government has shown support for blockchain technology but remains cautious about cryptocurrencies due to their volatility and speculative nature. Currently, cryptocurrencies do not have legal tender status in India, and there are no dedicated regulations governing them.
The recent introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill reflects the government’s call for global consensus on minimal cryptocurrency regulations, highlighting the need for international cooperation.
Moreover, the Reserve Bank of India (RBI) has taken a cautious approach towards cryptocurrencies, emphasizing the importance of regulatory caution to safeguard financial stability. In 2022, Governor Shaktikanta Das raised concerns about the lack of underlying value in cryptocurrencies and the need to protect financial stability amidst their rising popularity globally.
The RBI’s cautious strategy aims to preserve India’s financial sovereignty and prevent potential disruptions to the banking system that could arise from unregulated cryptocurrency activities. Through issuing warnings and promoting regulatory caution, the RBI aims to maintain resilience and security within India’s financial ecosystem in response to evolving digital asset environments.
Governor Das also warns about the risks associated with the crypto “party.” Despite this, the RBI continues to monitor emerging risks and challenges while carefully considering the possibility of introducing a central bank digital currency (CBDC).
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