The Reserve Bank (RBI) has advised the government to create legislation for cryptocurrencies, according to Finance Minister Nirmala Sitharaman. Today in Parliament, she was responding to queries about cryptocurrencies posed by MP Thirumaa Valavan Thol.
Finance Minister Nirmala Sithraman was asked what if RBI had issued instructions, circulars, directions, warnings, etc. regarding restricting the issuance, buying, selling, holding, and circulation of Cryptocurrency in India during the last ten years. She replied, “RBI has been cautioning users, holders and traders of Virtual Currencies (VCs) via public notices on December 24, 2013, February 01, 2017 and December 05, 2017 that dealing in VCs is associated with potential economic, financial, and other risks”.
Additionally, on April 6, 2018, “the RBI issued a circular forbidding its regulated firms from dealing in virtual currency (VCs) or offering services to help anyone deal with or settle VCs”.
She added that RBI, with its circular dated May 31, 2021 has also advised its regulated entities to continue to carry out customer due diligence processes for transactions in VCs.
According to laws governing the specifications for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT), obligations under the Prevention of Money Laundering Act (PMLA), 2002, etc. In addition to that ensuring the compliance with pertinent provisions under the Foreign Exchange Management Act (FEMA) for overseas remittances.
When asked about the question related to the central bank registering its concern over the adverse effect of cryptocurrency on Indian Economy. Nirmala Sitharaman answered the RBI stated that cryptocurrencies are not considered to be legal tender because all contemporary money must be issued by a central bank or government. Furthermore, the value of paper currencies are supported by monetary policy and their legal tender status, whereas the value of cryptocurrencies are completely based on speculation and unrealistically large returns, which may undermine a nation’s monetary and fiscal stability.
The Finance Minister Nirmala Sitharaman stated that the RBI has recommended that regulations be drafted for this industry in light of its worries regarding the “destabilising impact of cryptocurrencies on a nation’s monetary and fiscal stability”. “RBI believes that it should be illegal to use cryptocurrency”.
The central bank has often brought up issues with digital assets. In the RBI’s annual report, governor Shaktikanta Das referred to cryptocurrencies as a “obvious hazard” and claimed that anything that draws value from fantasy, “without any basis” is only speculation cloaked in a clever nomenclature.
The administration also announced a tax on virtual asset gains. The newest addition was a 1% TDS starting on July 1 of this year, while the 30% tax rate on virtual currency holdings went into effect on April 1. This has affected the volume of trading on Indian cryptocurrency exchanges.
image credit : the print
💫FOLLOW US FOR MORE UPDATES. ❌WE DO NOT HAVE IRRITATING AND SPAMMY NEWSLETTERS. ✅EVERYTHING IS AND WILL BE FREE FOREVER. SEE YOU AGAIN IN YOUR STORIES AND FEED 🙂
