Shantikanta Das, governor of, reserve bank of India had predicted some time ago that the next financial downfall of the economy will be due to the rampant use of cryptocurrency. He added that private crypto has no underlying value and can be a major threat to the macro-economy and financial stability of any nation. There are inherent risks in investing in crypto-currency. He remarked that the latest FTX says it all and this is what he has been long warning us about. He further explains that without any onus people should understand what a major risk it is to invest their money in private cryptocurrencies. Back in 2018, RBI imposed curbs on crypto trading in India. The ban was a massive setback and resulted in crypto exchanges filing a writ petition in the Supreme Court. In 2020 crypto currencies transactions were again allowed by the supreme court of India.
The court declared the “RBI circular unconstitutional”. Cryptocurrency exchanges sprung back to life. The Supreme Court didn’t take any definite judgment on the curbs by RBI. The verdict was given on the rampant number of petitions and writs that challenged the RBI circular or the given statement “prohibiting / not providing any services in relation to the virtual currencies including those of transfer or receipt of money in accounts relating to purchase or sale of virtual currencies”. The public statement that was released by the Supreme Court said that “When the consistent stand of the RBI is that they have not banned virtual currencies and when the Government of India has been unable to take a call despite several panels coming with several proposals, including two draft Bills, both of which advocated exactly opposite positions.” – The communication was made public.
While T. Rabi Sankar, deputy governor, RBI said that India should immediately ban crypto as it can or may even be worse than Ponzi schemes. While the FM Nirmala Sitharaman didn’t seem to care less about the idea of banning crypto. She added that since crypto currency is borderless it requires international arbitrage to be banned. The banning cannot be effective without international approval. While her understanding of the situation doesn’t seem convincing. It is highly likely that after demonetisation, the cash inflow is less in the economy, and the crypto currency makes it easy for enemy nations to use it for all sorts of anti-national and terrorising activities. The idea to levy a tax 30 percent on crypto trade is not convincing enough. While the government says that it will bring down the number of crypto transactions by 40 percent as taxation will make crypto trading costly with less profit on international scale. In spite of all of this, the Indian cryptocurrency market is expected to reach 240 million dollars by 2030. It is high time that the policy planners must start to give heed to the voice of the governor of RBI else it will be too late to insulate the Indian economy from the crisis caused by private crypto. Cypto currency still has a long way to go and its rise or doom cannot be decided as yet. India needs a strong regulatory framework to deal with cryptocurrencies. The decision of the regulatory body still needs to be taken is something the public is looking at. Crypto can be an asset but not a currency in India. Since Indian economy holds singular status and functions singularly, we don’t need any international approval for banning crypto transactions. It is better late than never. We need more transparency and accountability on all crypto platforms. Monitoring cross-border transactions on such sites still remains a big task as most of it is discreet. The movement of money as crypto is something the Indian economy needs to be wary of.— INAV
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