Since 2008, the Reserve Bank of India has never supported the adoption of virtual currencies. In 2018, the Reserve Bank of India prohibited regulated firms from dealing with digital assets or providing services to individuals or organisations dealing with virtual currencies. The Supreme Court lifted this restriction in the year 2020. The RBI Governor has gone so far as to describe digital assets as a “serious threat” to the financial system. Labelling cryptocurrency as a “serious threat” is due to the digitalisation of the existing banking system and the rise of cyber dangers.
Nirmala Sitharaman, the finance minister of India, disclosed that the Reserve Bank insists on a ban on cryptocurrencies. India continues to seek worldwide cooperation for the imposition of the ban, despite having articulated its position on digital assets. The government should issue clear restrictions, but the prohibition status remains unclear because international collaboration has not yet been extended. Before this, Shaktikanta Das, the governor of the Reserve Bank of India, discussed the issues surrounding digital assets by posing questions regarding the principles of the technology and its applications.
According to Nirmala Sitharaman, the RBI believes the virtual currency is not a currency because the central bank or government must issue all currencies. In addition, Sitharaman remarked that “the value of fiat currencies is supported by monetary policy and their legal tender status. However, the value of cryptocurrencies is mainly based on unfounded speculations and hopes of high profits.”
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