Crypto Could Shake Financial System, Warns RBI Governor Amid Policy Uncertainty
RBI warns cryptocurrency could harm India’s financial stability; policy clarity awaited amid ongoing government review
RBI Governor Sanjay Malhotra on Friday said the central bank is concerned about cryptocurrencies as it can hamper financial stability.
Malhotra was replying to a question during a media interaction post the RBI monetary policy about the developments in the backdrop of the Supreme Court's observation on crypto currency last month.
"There is no new development as far as crypto is concerned. A committee of the government is looking after this. Of course, as you are aware, we are concerned about crypto because that can hamper financial stability and monetary policy," Malhotra said.
The Supreme Court has last month asked the Centre to formulate a "clear cut" policy on regulating cryptocurrency, while underlining its impact on the economy.
A Supreme Court bench termed the Bitcoin trade as an illicit trade more or less like "hawala" business.
India is currently working on a discussion paper for cryptocurrencies and an inter-ministerial group (IMG), comprising officials from RBI, Sebi and finance ministry, is looking into global norms.
In absence of any regulation, cryptocurrency is not yet illegal in India.
The discussion paper will give the stakeholders an opportunity to give their views before India decides on its policy stance on cryptocurrencies.
In 2022, the government announced a flat 30 per cent tax on gains arising from cryptocurrencies. Taxing income from cryptocurrencies does not necessarily and explicitly legalise cryptocurrencies.
Currently, crypto assets are unregulated in India. Here cryptocurrencies are regulated from the perspective of anti-money laundering law. Besides that, income tax and TDS is levied on earnings from trading in such virtual digital assets. Also, GST is levied on cryptocurrency exchanges.
It may be noted that, on March 4, 2021, the Supreme Court had set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in relation to virtual currencies.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
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