Indian Finance Minister Nirmala Sitharaman has taken a firm stance on Bitcoin (BTC) and other digital assets, stressing that they cannot be considered currencies.
Sitharaman says she expects the G20 — the intergovernmental forum comprising 19 sovereign countries, the European Union (EU), and the African Union (AU) — to formulate a regulatory framework for cryptocurrencies.
Sitharaman also highlighted that crypto assets are mostly used for trading, speculation and profit-making activities rather than serving as traditional currencies issued by central banks.
Seetharaman also emphasized how crypto assets flourish through trading and speculation.
Sitharaman says the lack of regulatory measures has global implications due to the potential impact of cryptocurrencies on cross-border payments and illicit activities such as drug trafficking or terrorism.
Sitharaman participated in G20 discussions to address the challenges presented by crypto assets, and push for a unified global regulatory framework.
She highlighted the importance of international cooperation in formulating strong regulations that can effectively deal with the risks associated with cryptocurrencies.
Reserve Bank of India Governor warns of risks of cryptocurrencies
The Indian government is embracing blockchain technology but maintains reservations about cryptocurrencies due to their volatility and speculative nature.
In India, cryptocurrencies lack legal tender status, and there are currently no dedicated regulations governing them.
The recent introduction of the Cryptocurrency and Official Digital Currency Regulation Bill underscores the government's call for a global consensus on minimum cryptocurrency regulations, emphasizing the necessity of international cooperation.
Moreover, the Reserve Bank of India (RBI) has adopted a cautious approach towards cryptocurrencies, highlighting the importance of regulatory prudence to protect financial stability.
In 2022, Governor Shaktikanta Das raised concerns about the lack of fundamental value in cryptocurrencies and stressed the need to support financial stability amid the growing global popularity of cryptocurrencies.
The Reserve Bank of India's cautious strategy aims to protect India's financial sovereignty and mitigate potential disruptions in the banking system that may result from unregulated cryptocurrency activities.
By issuing warnings and enhancing regulatory vigilance, the RBI aims to maintain resilience and security within India's financial ecosystem in response to changing digital asset environments.
Das also warned that the cryptocurrency “party” is not without risks. Despite this, the RBI remains vigilant in addressing emerging risks and challenges, while cautiously examining the possibility of introducing a central bank digital currency (CBDC).
