RBI Governor Shaktikanta Das has reiterated his stance on crypto regulations, saying that India will not follow the footsteps of other countries and will adopt a cautious approach that suits its own needs and interests. He was speaking at a BFSI summit organised by the publication Mint on Thursday.
Crypto risks for emerging markets
Das highlighted the potential risks associated with cryptocurrencies, especially for emerging markets like India. He said that crypto could pose a threat to macro-economic and financial stability, and could trigger a global financial crisis if left unchecked. He cited the recent synthesis paper by the International Monetary Fund (IMF) and the Financial Stability Board (FSB), which provides guidelines and a roadmap for crypto regulation. The paper emphasises the need for country-specific regulations, taking into account the level of development, financial inclusion, and institutional capacity of each jurisdiction.
Das said that India cannot afford a “cryptomania” like the Tulipmania, a historical episode of speculative frenzy in the 17th century Netherlands that led to a market crash. He said that India needs to be prudent and vigilant in dealing with crypto, and not be swayed by the developments in other markets. He said that “what is good for another market need not be good for us” .
RBI’s position unchanged
Das also clarified that the RBI’s position on crypto remains unchanged, despite the recent approval of bitcoin exchange-traded funds (ETFs) in the US. He said that the RBI is not in favour of allowing private digital currencies in India, and is working on its own central bank digital currency (CBDC), which will be launched soon. He said that the RBI is in close coordination with the government and other stakeholders on the issue of crypto regulation, and expects a clear legal framework to emerge soon.
The RBI governor’s remarks come amid the ongoing debate over the proposed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which seeks to ban all private cryptocurrencies in India and create a legal framework for the CBDC. The bill is expected to be tabled in the upcoming budget session of the parliament . The bill has faced opposition from various quarters, including crypto investors, exchanges, industry bodies, and experts, who have argued for a more balanced and progressive approach to crypto regulation.