New Delhi, May 15 (Agency)
Top RBI officials have told a parliamentary committee that cryptocurrencies could lead to ‘dollarisation’ of a section of the economy, which would be against India’s sovereign interests. This will pose challenges to the stability of the financial system. Sources said that top officials, including RBI Governor Shaktikanta Das, presented their views before the Parliamentary Standing Committee on Finance headed by former Minister of State for Finance Jayant Sinha. He made them aware of his apprehensions regarding the cryptocurrency. According to a member of the committee, RBI officials said, “This will seriously undermine the central bank’s ability to set monetary policy and regulate the country’s monetary system.”
He said that cryptocurrencies have the potential to become a medium of exchange and can replace the rupee in financial transactions both domestically and cross-border. Central bank officials said the currency “could occupy a part of the monetary system and could also undermine the RBI’s ability to regulate the flow of money in the system”.
Can be used for terrorist activities
RBI officials cautioned that cryptocurrencies can also be used for terror financing, money laundering and drug trafficking and told the parliamentary committee, “Almost all cryptocurrencies are dollar-based and issued by foreign private institutions.” Huh. In such a situation, it is possible that this may lead to dollarization of some part of our economy, which will be against the sovereign interests of the country.
Banks will also have an adverse effect
RBI officials said cryptocurrencies will also have a negative impact on the banking system, as being an attractive asset, people may invest their earnings in them, resulting in a lack of resources for banks to lend. In this year’s budget, Finance Minister Nirmala Sitharaman had announced a 30 percent tax on trading in cryptocurrencies and related assets.
Only 2 crore people invest now
According to an estimate, the number of people investing in crypto in the country is between 15 million and 20 million, who have about $ 5.34 billion in crypto currency. There is no official data available about the size of the crypto market in India. This parliamentary committee is in extensive consultation with the finance regulators.