Indian central bank governor Shaktikanta Das told a summit on Wednesday that private cryptocurrencies could be the cause of the next financial cataclysm.
The Indian central bank, known for taking a tough stance against private cryptocurrencies, has reiterated its position once again.
The governor of the Reserve Bank of India (RBI) said, “And I would still be of the view that this
Das noted that different countries have approached the asset class differently, but the RBI has been adamant about its prohibition. “Because if this is allowed to escalate… mark my words, the next financial crisis will come from private cryptocurrencies.”
Das said that crypto developments over the past year, including the FTX collapse, support the belief.
Meanwhile, the RBI chief denied waging war against the asset class, reiterating that crypto has no inherent value. He argued that private cryptocurrencies were created to “bypass and break the system”.
The official said that the claims come from the inherent risks of the property. He added that the risks associated with cryptocurrencies threaten financial and macroeconomic stability, forcing the top bank to maintain this stance.
RBI major private crypto is also called speculative asset class. “I think the term private cryptocurrency is just a trendy way of describing what is otherwise 100% speculative activity,” he said.
According to Das, the introduction of the centrally backed digital rupee has nothing to do with weakening the private sector. “It is not a question of offering competition to a private cryptocurrency. I think that is how the world is going to develop.
On 1 December, four banks in four cities joined to launch the Indian digital rupee retail pilot. The RBI governor was questioned about the usefulness of the launch, given that India already has an effective peer-to-peer fast money transfer system in the form of the Unified Payments Interface (UPI).
Das clarified that UPI is a payment system based on centralized banking, while CBDC is a currency in itself. The RBI chief said, ‘CBDC is like a currency note. You go to the bank, you draw it, you put it in your wallet, and you spend it.
The governor claimed that the production of physical notes would soon become obsolete and that a CBDC would have the logical advantage of being more accessible and faster, while endorsing the digital rupee as the currency of the future.
“The next point is for international transactions. When two countries have their own CBDCs, it can be immediate,” commented Das while discussing the benefits of CBDC remittances.
Government reveals crypto tax collection figures
Interestingly, despite agencies taking a negative stance on private crypto, the asset class continues to be a source of revenue for the government. The Indian government reportedly received around $7.3 million in Tax Deducted at Source (TDS) from the trading of crypto assets, according to an announcement made by the Finance Ministry in Parliament last week.
Notably, the administration kickstarted the taxation regime in the current financial year.
Recently, Minister of State in the Ministry of Finance Pankaj Chowdhary also revealed that the Enforcement Directorate (ED) is probing several cases related to cryptocurrency fraud and money laundering. As reported by local media, their response indicated that as of December, some $109.6 million had been attached or seized in the category. Additionally, the official said that three people have been arrested in the mentioned cases.
However, the country is still awaiting regulatory clarity in the form of the crypto bill. But the Finance Ministry made it clear in a parliamentary statement this week that this is subject to international cooperation.
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