The Reserve Bank of India doesn’t appear as intrigued by the emerging crypto technology as other central banks. While the apex banks of countries like the U.K. and Australia are looking to define regulations that would foster the growth of crypto assets in their respective jurisdictions, the Reserve Bank of India is looking to ban the asset class outright, as noted by India’s Finance Minister.
India needs global cooperation in the prohibition of crypto
In a series of answers to questions posed by a member of parliament, Thirumaavalavan Thol, in the Monsoon Session, Nirmala Sitharaman – India’s Finance Minister – mentioned that, while the Reserve Bank of India is looking to prohibit cryptocurrencies entirely, there is the need for global cooperation in this regard to avoid “regulatory arbitrage” due to the borderless nature of crypto.
“Any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” said the 62-year-old economist.
Speaking further, Sitharaman implied that the value of cryptocurrencies is solely dependent on “speculations and expectations of high returns that are not well anchored.” This line of thought conforms to the idea propagated incessantly by Andrew Bailey, Bank of England governor. Bailey has insisted that crypto-assets do not have “intrinsic value,” recently stating that the growing adoption might give the assets some “extrinsic value.”
Despite regulatory uncertainty, India’s crypto adoption rate has surged
Despite the regulatory uncertainty and confusion regarding policies affecting crypto, India’s crypto adoption rate has continued to grow rapidly. As of November of 2021, crypto ownership in India was at the 14.7% mark. Five months later, in April this year, the value doubled to 29.9%, according to Finder’s Report data.
According to the Chainalysis 2021 Global Crypto Adoption Index, India ranks second in overall index rating, behind Vietnam. This comes amidst suggestions that Crypto is illegal in the country. In February, Sitharaman noted that the government wishes to impose a 30% tax on any income from trading crypto and a further 1% tax on all crypto transactions.
The RBI had in 2018 sought to ban Crypto, but a ruling from the Supreme Court destabilized the apex bank’s plans; this leaves crypto well within the grey area – neither legal nor illegal. India-based crypto enthusiasts are looking to see what will become of these recent plans. India, like other countries, has also shown interest in issuing a CBDC with an underlying Rupee value.